|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Is It Too Late To Successfully Compete With Amazon? Not For Ebay and Google
Posted by: Intelligent Speculator (IP Logged)
Date: September 9, 2013 07:33AM
A few weeks ago, I was very surprised to hear that eBay (EBAY) was planning on building some warehouses as it rushes to build its same-day shipping infrastructure. Even more surprising was the announcement earlier this year that Google (GOOG) had started to test a similar service near its headquarters. I called it a critical mistake and so far have not seen anything that would convince me otherwise.
The move made a bit more sense for eBay which competes rather directly with Amazon in the ecommerce sphere and continues to diversify its offering (it’s looking less and less like an auction site).
AMZN) position with a lot of envy. While it’s true that profits remain minimal at best, revenue growth remains strong and Amazon is becoming more and more difficult to compete with. A big reason why of course is Amazon’s incredible efficiency in the sale and distribution system. Amazon has been working on it for almost 20 years now and is approaching 100 warehouses making it increasingly possible to offer same-day delivery to the majority of its biggest market. It has also been improving its presence in Canada, Europe and elsewhere.
How in the world will players such as Google and eBay be able to compete with Amazon in building such an infrastructure? They do have cash but they are over a decade late. I just don’t see these players having an actual shot. Both Google and eBay should focus on their strengths instead of entering a market where they are most likely doomed.
There Are A Couple Of Companies That Have A Shot Though
I don’t think it’s too difficult to look for a couple of companies that do have a shot at competing with Amazon. Both Walmart (WMT) and Costco (COST) have been moving very fast to better compete with Amazon. They have advantages and disadvantages compared to Amazon but I believe they have a decent shot at competing:
-Much stronger physical presence (they have stores almost everywhere)
-Stronger relationships with producers in many cases
-Technology disadvantage (in terms of expertise they are far behind from every aspect – customers, website knowledge, etc)
-More expensive cost structure (they own expensive land, have many times more employees, etc. These will not be easy to change over time. Having thousands of stores with dozens of employees in each makes it difficult to compete with a company like Amazon.
Who Has A Better Shot At Competing?Do you think companies that have a digital background and are moving towards physical goods (GOOG, EBAY, etc) would do better? I personally think traditional companies such as Walmart or Costco or better positioned.
Disclaimer: Long Google (GOOG)
Stocks Discussed: AMZN, GOOG, EBAY, WMT,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.