What Amazon's Innovations Mean for Online Merchants

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April 24 (Bloomberg) -- Merchantry CEO Rick Watson and Bloomberg's Tom Giles comment on Amazon's earnings, and distribtuion innovations. They speak with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Here?

Shipping contents were huge.

Amazon does spend aggressively.

This is in keeping with their history from many quarters now.

It is just a lot of aggressive investment in the future breed whether it is the film at centers.

It is getting products out to the consumer much more quickly.

Shorten that amount of time, and it is another way that amazon is just tempting other industries.

Sales are up 23%. expenses are also up 23% pretty big part of that is shipping.

This is what your merchants depend on.

They get their goods from one place to another.

What stood out from the report?

What stood out is the amazon investment they are putting behind getting the last mile to the consumer.

You think over time, $20 billion a quarter, there is a lot of risk in the last mile.

If you go to the holiday, amazon bought the week before christmas to make sure they could get packages at on time.

That is not sustainable long-term as volume increases at this pace.

Amazon is working on its own shipping network focused on this last mile, as you say.

This will be out of the ups and fedex.

What do think about this?

Is this something your merchants would like?

I think anything that helps them get more exposure to amazon shoppers, merchants would love.

They are looking for alternatives.

We are always looking tee shot.

-- they are always looking to shop.

For sure they will open this up to third-party customers.

Over the next several years.

What about the shipping cost?

$1.8 billion.

Up 30%. is bezos ever going to turn a profit?

The investors seem to let him get away with this as well breed quarter after quarter.

The fact is, remember what happened at christmas time brady made these promises to get the product.

It didn't matter when you ordered them.

We will get them to your door in time for christmas.

That is the expectation that amazon is setting.

It is raising the bar for everybody.

In terms of shipping costs, something they are doing that is important.

They have raised the rise of amazon prime.

The flat fee you pay every year to ensure that you get these items.

Likes -- that compels people like me to order one hand and have it delivered to me and i will not put other stuff in there.

I get delivery for free.

I just bought one pen for my friend.

Everybody does it.

How does amazon scale this in an economical way?

How will they turn a profit?

The thing is, if you look at amazon in segments, they are retailer.

We are shipping company.

They are a software provider.

They are in the cloud.

We are in the music and video business.

They look at their lines of business is independently.

They almost can't afford not to invest as much as they are.

Much more than every other retailer.

It is interesting, with amazon fire, now they have got a partnership with hbo, which is the story.

Hbo has its content lock down.

You look at netflix.

This is their sole business.

Video and streaming and creating original content.

For amazon it is, not just a hobby, but not nearly -- it is a hugely important part of the business.

They have this hardware.

They are not making a profit on that.

They idea is they will be increase lay become ubiquitous and invaluable not just for books, but for tv shows, for movies.

For all of those things we go elsewhere.

Amazon says, do it here.

Watch it on your kindle fire.

Watch it on these other products that you are going to see coming down the pike.

At some point the disbanding -- at some point the spending is going to have to trail off and read more benefits from it.

To merchants worry about amazon's margins?

Merchants.

Yeah.

I could care less about amazon margins.

The only camp out -- they only care about their margins.

Can i get exposure from amazon?

While not giving them too much information about my business.

What about rounds?

Drones are long-term investment.

It is farther out than they predicted.

They are trying to figure out the last mile.

In terms of their own fleet, it is economical to do that in l a, new york, los angeles.

It is not economic to do that in rural areas.

That is what drones are trying to address.

Ceo of march entry, thank you.

I want to get tom, with you, to

This text has been automatically generated. It may not be 100% accurate.

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