Amazon loses money on all of its direct retail business, and loses even more on its Amazon Prime customers, an analysis from Seeking Alpha shows.  Amazon lost 10% of sales on Amazon Prime, which provides free two-day freight and free video streaming to members, in 2012, the analysis showed.  It was the most significant contributor to Amazon’s loss in 2012.

Amazon Prime “has saddled Amazon with a fast growing, money losing loyalty program that will be near impossible to raise prices and/or reduce services to get above break-even – and the economics will make near impossible to make it up in volume,” the report said.

And the company lost 2.6% of sales on its non-prime Direct Retail business last year, according to the analysis.

Its third party marketplace and Amazon Web Services were net profit centers.

Amazon is a fierce competitor with brick and mortar stores and other online retailers on geek culture categories such as graphic novels, DVDs and BDs, toys, and games, often beating all competitors (see “Amazon Winning Toy Price War”).  But despite huge volume and increasing market share in all those categories and in its over-all retail business, it is not making money on it.

With pressure to improve margins and more states charging sales tax (and evidence that its narrow price advantages are key to maintaining its market share, see “Sales Tax Matters”), Amazon may finally be hitting some limits to its ability to compete on price.