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)