[DiogenesLamp]

And a month later they have competition. The barriers to entry in online retail are very low. Anyone can sell online and can scale their operation from small to large with little difficulty. A little guy can't do same-day delivery but almost any traditional retailer can.

No one is going to be able to match their economies of scale. That is entirely a function of how much product they move, and once a threshold is achieved, it will then become impossible to offer prices lower than the behemoth who currently has most of the market.

They can reduce their profit margin lower than your cost of doing business.

[redgolum]

On some items, I wonder how they are making any money.

Which they may not be.

[Alberta's Child]

I can see the day when Amazon will be undercut by a bunch of Mexicans running their own off-the-books operation. If you think that's absurd, remember that this is one of the things that is really hampering Uber's ability to run their business profitably.

As I see it, Amazon's biggest challenge is that it is operating in an industry that is nearly 100% "commoditized" -- meaning it is nothing more than a cheap service where customers expect it to be almost free, and where there is no distinction among brands for customer loyalty.

[palmer]

No one is going to be able to match their economies of scale.

That is false for just about every category of product. Look up the Amazon price and then look for a lower price and you will likely find one. The convenience of Amazon Prime keeps customers as well as the fact that Amazon advertises for many other retailers.