This Could Be Huge for AMZN Stock
Amazon.com, Inc. (NASDAQ:AMZN) is about to go all in with a huge wager. CEO, Jeff Bezos, is aiming to expand the company’s dominion beyond the Internet space. Stockholders must look out as this could take AMZN stock on another big winning streak.
Before I get to it, let me take you three months back in time.
Back in November, Amazon did something peculiar. This two-decade-old online retailer decided to remodel its business. It forayed into an avenue it was never expected to enter.
Amazon launched its first ever physical store in Seattle. The media was buzzing. The move was initially met with a lot of criticism. It was believed to be an ordinary bookstore and many questioned this move. How could Amazon survive in the brick-and-mortar world with no prior experience? How will it make money from selling books? Why even open this one store when it already has a better online selling model? But of course, its visionary leader is celebrated for such gutsy adventures.
Jeff Bezos likes to get his hands dirty in just about everything. Like a scientist, this man likes to experiment to see what works. And you must have guessed by now that this was Bezos’ new laboratory.
Now, it appears that this experiment was successful because Bezos is taking it to the next level. Yes, Amazon might now be planning to open, not one or two, but 400 of such stores! (Source: “Amazon Plans Hundreds of Brick-and-Mortar Bookstores, Mall CEO Says,” The Wall Street Journal, February 2, 2016.)
How Will Amazon Make Money from This Venture?
As for how these bookstores will make money, you’ll be surprised to hear what Bezos might be planning.
Walk into the Seattle store and you will see nothing too extravagant. You might think it looks just like an ordinary bookstore. Actually, it’s anything but.
Two things will catch your eyes if you are paying attention. One, along with books, you’ll find all of Amazon’s gadgets on display. These include its set-top TV box, its tablets/e-readers, and its artificially intelligent personal assistant. Definitely not your ordinary bookstore!
Two, there is no mention of prices in the store. All you see is barcodes. So, you must take out your phone and scan the barcode to get an access to its online store where it shows you everything from prices to ratings. In case you don’t have a phone handy, the store attendant will do the scanning for you. But in this age, who doesn’t carry a phone?
So, what exactly is Amazon achieving by making you use it?
Data! Lots and lots of insightful user data!
Let’s suppose you’re about to have your first baby. Since it’s your first time, you want to be well prepared for it. You walk into the Amazon store looking for some good reads. Every other book you pick up on the subject and scan on your phone for price becomes part of your search history.
Amazon is reading this data and gets a hint on what you will be looking for next. A few days later, you open your Amazon account to see ads on cribs, diapers, and every other baby product you can imagine. You get the idea now?
This is just one way Amazon could use your data to drive more sales out of it. Not just for books, but also for everything else it sells.
You see, Bezos’ move is absolutely ingenious!
Through this venture, Amazon is creating an ecosystem where people will be connected to everything Amazon. The move will drive both in-store sales and online sales. This will include more than just books and its technology gadgets. Physical store visitors will also get exposed to Amazon’s e-commerce business beyond books.
The Bottom Line on AMZN Stock
It won’t be wrong to predict that if this works out right, Amazon might eventually open full-fledged brick-and-mortar stores. So far, the prospect is looking great. If Bezos hits the bullseye with this venture, AMZN stock could once again skyrocket.