Sometimes, a good business is built on one good idea. Perhaps it was skill, or perhaps it was luck, but the niche a company carves itself can propel it so far, but only for so long. Take Amazon. It’s good at selling books, we all know that. But what about expansion?

Of late, profits at the company have stopped growing, and recently results have been typified with news that the company is investing into some new idea, or technology

In the latest quarter it happened again. This time, things were not helped by the loss of the agreement with Toys ‘R Us. Amazon was once the online face of the giant toy shop chain. But one legal battle later, the partnership is no more and the online book seller is having to invest in its own toy category.

While Amazon has made book retailers across the world suffer from the challenge it poses, the online superstar is not immune to competition itself. To differentiate itself, it’s subsiding postal costs, but that costs big bucks

Put all that together, and Amazon has seen profits fall. In the latest quarter net income was 22 percent down on a year ago, at a mere $22million. And yet, sales were up. Worldwide they increased by 37 percent, and even the so-called “mature US market” saw growth of 21 percent.

To subscribe: visit this link

© Investment & Business News 2013