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Key Reasons Why You Should Keep Your Eyes Glued to Amazon

May 02, 2014 | About:

Suravi Thacker

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Online shopping has made lives easier by enabling people to make orders at the click of a button. With the emergence of online players, such as Amazon (AMZN), competition for brick-and-mortar retailers has also increased. Amazon’s strong delivery network and wide variety of products attract customers in hordes.

Further, Amazon’s efforts are endless as the retailer continues to bring in new services and products to lure customers. This was once again proved right when the online company posted its first quarter results recently, which beat the Street’s expectations.

Digging Deeper

Revenue stood at $19.74 billion, a jump of 23% over last year, as people continue to shop for their needs at Amazon’s online store. Also, earnings for the quarter climbed 32% to $108 million. The company remains focused on providing the best customer service and efficient delivery to customers.

A key point to note here is that the retailer managed to beat the estimates despite raising its price for Prime merchandise services by $20, to $99 per year. Although this increase took effect at the far end of the quarter, Amazon declared that customers did not shy away from the price increase and continued to shop at Amazon.com.

Amazon also launched Fire TV, a media streaming device which includes a set top box and provides access to video games, Internet and streaming shows for Amazon’s Prime subscription customers. In fact, the online retailer has also made a deal with HBO, which enables Amazon to offer more shows for its Prime members only. For instance, shows such as The Wire and The Sopranos will now be available exclusively for Amazon Prime customers.

Amazon’s cloud computing services have also become very popular with customers. Although it had to undergo price cuts in order to lure customers, it managed to increase revenue largely. In fact, revenue from the Others segment, which includes web services provided by the retailer, surged a whopping 58% to $1.26 billion, over last year.

A Hiccup

Although the retailer has been doing well as it provides efficient delivery of products at razor thin margins, the sales tax reform has been a matter of concern. This will make its products expensive since it would result in a price increase of 5% to 10%. Hence, its products will no longer be the lowest in price.

Some More Efforts

Nonetheless, Amazon continues to put in efforts to grow. Its services such as Prime Pantry and Dash have been quite successful. Prime Pantry is a service for Prime customers, which delivers groceries at their doorstep for a flat fee. Dash is a device which enables customers to speak their orders without having to visit its website.

Also, AmazonFresh provides fresh products to customers and gets it delivered on the same day of order. These initiatives have won the customers’ hearts, resulting in higher sales.

Moreover, Amazon plans to buy Sears Holdings, which will increase the retailer’s physical presence. Hence, it will be easier for customers to pick up ordered goods from nearby Sears’ stores. Even Amazon will be able to deliver goods easily to its customers.

Key Takeaway

Looking at the quarterly performance of the online retailer as well as its strategic moves to lure customers, this company looks quite interesting. Despite an increase in price, customers continue to visit Amazon’s online store. Moreover, its exclusive services to customers make it even more popular. Hence, this company is worth a closer look.


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