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Molson Hart Profile picture
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Feb 11 • 4 tweets • 1 min read
For years, I have seen the same take over and over about Amazon.

First it was “Amazon doesn’t make money.”

Then it was “Amazon doesn’t make money without AWS”.

Now we have a new version: “Amazon doesn’t make money without AWS and advertising.”

Say it with me now…
Amazon’s retail business is profitable and very much so.

They use the branded 1st party retail sales as a loss leader to print money off of their marketplace which is, unlike retail, riskless profit.

I know because I’ve looked at the unit economics of their business for years.
So then why does their business look unprofitable after separating out AWS and advertising?

First reason is they’re aggressively depreciating every plane, truck, and warehouse they buy.

Second reason is this crap. How much of it makes money? It’s all in “retail”.
Amazon’s marketplace is actually their highest moat business. It’s a better business than AWS which has less market share significantly more competition and stronger competition.

I suspect they understand this and deliberately conceal it but who knows?

/end rant

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More from @Molson_Hart

Molson Hart Profile picture
Jan 30
One of the dudes I play bball with is an engineer for ercot, the texas agency that is often blamed for the Feb 2021 freeze.

His explanation of last years freeze:

1. Nat gas power plants were not built for such cold temperatures and they broke, not the green wind turbines

1/n
2. There just was not enough power generation. Ercot’s job is to best use the power they are given by the power plants and there was not enough so they had to rotate it between the residential areas.
3. Depending on whether or not the city’s residential grids were shared with critical infrastructure that never loses power eg hosptials, fire, and other city stuff, their experiences were different
Read 5 tweets
Molson Hart Profile picture
Jan 30
I college, I was taught and convinced that data analysis could do anything and that if you weren’t using it, it was because you weren’t smart enough to.

A decade later, I would say that besides throwing the datapoints up on a graph, it’s almost always useless.

1/n
The world is too complex to gain understanding from a regression or other complicated mathematical formula.

Even randomized control trials, which people who operate in the real world almost never have access to, are often bullshit.
Today, I think data analysis is mostly how people, namely academics and some professions, choose to communicate.

It’s sometimes useful, but also signaling to show that you’re part of a group.

If you want to be heard in that group, you must speak their language.
Read 5 tweets
Molson Hart Profile picture
Jan 29
I have a relative who is fat.

Whenever we tell her to lose weight she says “it’s my metabolism!” 🙄

Anyways, 2 years ago she came to stay with us and I said “great you’re going to lose weight now!”

She showed up with a cane and could barely walk, but after 2 weeks of…
diet modification (basically less fast absorbing carbs) she was able to walk without a cane having lost a lot of weight! She felt great.

Then all of sudden, despite continued diet changes, the weight loss stopped.

I couldn’t figure it out until…
She left the house to go shopping.

I went through her luggage and it was full of candy 😂

The moral of this story is if someone tells you that they can’t lose weight because of X, X is probably them.
Read 4 tweets
Molson Hart Profile picture
Jan 27
Answering questions publicly is more fun.

1. Not really because 9 times out of 10, a new bolt on company is a new supplier. Most products where you’re getting a benefit from container scale are already there when they sell to thrasio. Combining two factories products is…
inefficient and a headache. Like I said, weak returns to scale. The other problem is timing. You’ve got to have two shipments ready at the same time and they’ve got to fit together.

2. 3pl savings are very minimal because of huge assortment of product (headaches) and inability
to negotiate better pricing with FedEx ans ups because you’re using Amazon.

3. By and large the so called “mom and pop” business owner grinds way harder than the thrasio 9-to-5er and is probably more knowledgeable and smarter. Plus it’s easier for the mom-and-pop to blackhat
Read 5 tweets
Molson Hart Profile picture
Jan 25
I read this 800 pager because @elonmusk said it was good.

He was right.

Thread of the most interesting parts:
Read 7 tweets
Molson Hart Profile picture
Jan 23
I’m the founder CEO of an educational e-commerce toy company that did $8.8 million in sales in 2021.

This article is going to tell you what that was like and how things were different in 2021 than in 2020.

Here's a 🧵 of the highlights 👇

1/12

molsonhart.com/blog/being-an-…
Despite our best efforts, Amazon still accounts for 90.8% of our sales.

2/12
The moat that people rely on to protect themselves from competition on Amazon is pretty unreliable.

3/12
Read 12 tweets

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