One of the objections investors have about Amazon.com Inc. (AMZN), which was evidenced again in its most recent quarter, is that its primary e-commerce business barely makes any money. Indeed, the operating margins of this part of the company were only 0.8%, worse than Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT), according to reports of their most recent earnings.

Amazon's margin across the whole company was 2.9% last quarter, but the strength of the number was provided by Amazon Web Services. North American e-commerce sales were $26.2 billion, on which the company had an operating profit of $816 million. International e-commerce revenue was $14 billion, on which the company lost $487 million. AWS revenue was $3.5 billion, and its operating profit was $926 million. For the entire company, revenue was $43.7 billion, on which Amazon had an operating profit of $1.3 billion.

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In its fiscal third quarter, which ended October 31, Wal-Mart's revenue was $117.2 billion, on which it had operating income of $5.1 billion, or 4.3%. Since e-commerce is such a small part of its revenue, the measures are almost entirely from brick-and-mortar sales. This model is supposed to be a disadvantage. Based on operating margin it is not. Amazon management may argue it continues to invest in the future. However, Wal-Mart management would make the same argument as well.

Target's most recent quarter was considered poor. However, its operating margin was strong, as measured against most other large brick-and-mortar retailers. Revenue fell 6.7% to $16.4 billion for the period that ended at the close of October. Operating income was $1.1 billion, up 21.1%. That leaves an operating margin of 6.4%.

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Almost all large retailers make very little money in the current environment. Amazon makes almost nothing. It has been said over and over that at some point Amazon has to stop experimenting and investing in marketing enough to show a reasonable profit.

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