David Rosenthal: belief

Transcript context

…They have more predictability, they have more loyalty, so they have longer customer lifetimes, so they have more absolute margin dollars from purchases coming in. A thing we haven't talked about, which is another just amazing insight, is the cash flow dynamic of this. Amazon charges me $129 at the beginning of the year before I make any purchases on their website, and they get to do stuff with that cash. It is an incredible form of float on top of many other forms of float that they have going on in their business. Just to complete the flywheel, Amazon through having all of this leverage that we just talked about in their operation, this operating leverage, float, and all these wonderful things, they can work on charging even lower prices providing even more vendor selection and even better convenience. All three on the holy trinity, they get better at that. That attracts more customers, more customers then attract more sellers and suppliers on the platform. That allows Amazon to get more operating leverage, and then the cycle just repeats itself over, and over, and over, then drives itself around many, many, many times a year. I could be wrong on this. I believe Amazon's inventory turns per year are something like 16 or something insanely high. Probably not as high like a Costco, but for the complexity of Amazon's operations and the breadth of items that are sold in the store to get that kind of inventory. And that's just the first party. Fifty-seven percent of Amazon sales right now are from third-party sellers, where Amazon's just collecting margin dollars and holding no inventory.…

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