Everyday millions of people go on Amazon and buy things, this is changing the retail world and some ways it is good, it other ways it has challenges. Shira Ovide wrote a column in Bloomberg called Amazon’s domination is blocked by a delivery truck. Amazon digital world dominance is meeting the physical reality of packing, sorting and delivering those orders.

Those distribution orders cost Amazon $18.5 billion or 12.3% of its revenues are spent on sorting packages, transporting them and handling the shipping costs. In 2012 the number was 8%. This is a company which has an operating margin of 2.4%.

Part of the costs is Amazon has a program where independent merchants including Nike  sell through Amazon. The program allows the merchants to store their inventory in Amazon’s warehouses. The good news is half the orders of Amazon are coming from independent sellers. The downsize is not all independent sellers have the ability of Nike’s just in time production and sales ability.

It is expected Amazon will continue to rely on FedEx, UPS and US Postal Service but no is discounting Amazon may want to do more in house with its own fleet of trucks, planes and warehouses. In theory those companies could become subsidiaries of Amazon or lose volume shipments. (change is everywhere).

Amazon’s zeal to win the war to customer’s doors is also a reminder that success in the technology industry often depends on mastering the rather dull things (operations). Technology is often seen as the imagination of the human, but success has more to do with the nuts and bolts.

Linking to dividend paying stocks, as an investor you expect the company you own is really good at the execution of its products and services. The execution or delivery aspect allows for continuing repeat customers and as long as they are not looking for alternatives, profits should be made and dividends paid.

There are more questions than answers, till the next time – to raising questions.