E-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) is one company that never fails to surprise me. The company misses no opportunity to tap into anything and everything that comes its way. The latest bombshell Amazon unleashed on Wednesday is the opening of its first-ever brick-and-mortar bookstore in Seattle, loaded with not only books but also the Amazon merchandise—Kindles, Fire TV, and Tablets. AMZN stock is rallying to its all time highs, which has AMZN stockholders worried whether the stock will hold up the rally or just rout. But I’m seeing some great upside here.
Here’s What Amazon.com Stockholders Should Watch For
The e-commerce retailer, whose Kindle tablets were often blamed for bringing an end to the era of paper books, is now moving back in time. The company renowned for taking down bookstore giants like Barnes & Noble, Inc. (NYSE:BKS) is now treading down the same path. The move has AMZN stockholders worried because unlike its current e-commerce model, the brick-and-mortar model will require greater capital expenditure. Though one store alone cannot be expected to add much to its revenue, if successful, this could lead to a change in Amazon’s fundamental business model of an online retailer.
I strongly believe the move to the brick-and-mortar model will bolster Amazon’s position in the retail industry. AMZN stockholders should be ready to see some new online features being introduced, in addition to reviews and ratings, that will help support and bring in in-store sales.
The company’s initiative to open the store within close proximity of local universities is a genius move and will drive traffic from the younger target market, not only to its in-store business but even its online business. It wouldn’t surprise me a bit if the store goes beyond just an ordinary bookstore, to open some famous coffee café and power it with free Wi-Fi to let its customers enjoy the experience of browsing through their Kindles and flipping through their books.
If this turns out to be successful, we might very soon see a new brick-an-mortar business line branching out on the Amazon tree. Amazon has already been clawing at the biggest retailer, Wal-Mart Stores Inc. (NYSE:WMT). A full-fledged brick-and-mortar Amazon retail store could be the biggest threat to Wal-Mart’s core business. Wal-Mart has already been gearing up for the inevitable.
Earlier last month, Wal-Mart CFO revealed the company’s plans to decrease capital expenditures and instead step up digital and technology spending by over a billion dollars. The steps the two retailers are taking could bring them head-to-head in the retail arena.
Amazon is tapping into areas it had never explored before. It remains to be seen whether these wagers will pay off or simply tank like a few of Amazon’s earlier moves, including its hotel booking platform, Amazon Destinations, that competed with companies like TripAdvisor and Priceline, and its daily deals service that competed with Groupon.
The highly customer-focused e-commerce company that started off with a services-only model has come a long way since then. The company has not only tapped into the products market but is also on the path to becoming a leader in the “Internet of Things” industry.
Led by a visionary leader, Amazon’s mantra in all these years has been to stay young forever. The company skipper, Jeff Bezos’, known for his go-getter attitude to try luck with anything and everything, could eventually take the company from being the jack of all trades to the master of all trades.
This Could Be Huge for Amazon.com
The company’s motto has never been to make money by overpricing its products and services. Amazon’s focus has always been its customers. My belief in Bezos long-term vision keeps me optimistic about the company and the AMZN stock. The company has attractive cash flows and is tapping into many great avenues with huge growth potential. I would be a fool to bet on the wrong side of AMZN stock.
Bottom line, I’m bullish on Amazon.