1 Misunderstood Threat to Amazon

Before you go, we thought you'd like these...
Before you go close icon

The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith and senior technology analyst Eric Bleeker discuss topics across the investing world.

In today's edition, Eric and Austin discuss a misunderstood threat to Amazon.com: sales tax. So many of Amazon's competitors, as well as analysts, have looked at Amazon's "tax-free benefit" as the real reason for its success over other more traditional retailers. This is a misplaced observation, and fails to address the reality, which is its lower prices due to less overhead and immense economies of scale. It also isn't an honest look at how sales tax is applied, which is at the end of a transaction and will have an immaterial impact on Amazon's profit margins.

It's misunderstandings like this that have turned Amazon into a multibagger for the early investor, and a favorite of our Rule Breakers members. If you feel a bit of regret about missing out on Amazon's run a few years ago, don't worry, because chief Rule Breaker and Motley Fool co-founder David Gardner has picked the next rule-breaking multibagger.You can discover this soon-to-be-highflier today in our special free report. Read more here.

At the time this article was published Austin Smithhas no positions in the stocks mentioned above.Eric Bleekerhas no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Best Buy.Motley Fool newsletter services recommendAmazon.com. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners