MOLI VIEW™

Amazon.com just reported record earnings and Wall Street rewarded the good news with a big boost in its stock price.

I'm not really surprised that the company, led by Jeff Bezos, is doing well.

In terms of stock value, this is déjà vu. Even before they were making money, the stock price was up there, mostly based on expectations rather than actual value. (That's how the market works, by the way; it is far, far from rational.)

But now, after several Internet bubbles have burst, the company is actually doing quite well. Interestingly, their core business, which used to be books, has expanded into a wider variety of products, including music, electronics, clothing, jewelry, and food. I buy steel-cut Irish oatmeal from Amazon (in fact, if you have a crock-pot, e-mail me for my recipe, if you like!).

But it's not just selling these things that's made Amazon a smash. A few years back, they tried to get into auctions in competition with eBay. It wasn't much of a success, though they're still trying. But a few years ago, Amazon opened up their site to competitive vendors selling the same items that they do!

And it worked. Unlike eBay, they don't charge for listing things, but they take a commission instead. Along with other services, and sales of their core offerings, Amazon is doing quite well.

Why? I think that's another story.

Tomorrow: Why Amazon works.

Richard Pachter is the MOLI View's contributing editor for Business.

» Read Richard's blog