Amazon (AMZN, Financial) has been going through the heat of intense competition worldwide and especially in Asia where it is poised against few of the recent greats like Alibaba (BABA, Financial) and Flipkart. But there is an old saying – gold emerges out of fire test – and it holds true for Amazon.
Despite facing stiff competition from the recent ecommerce protégée and the retail giants like Walmart (WMT, Financial) the recent consumer survey by Consumer Intelligence Research Partners (CIRP) still states that Amazon is the most preferred shopping destination for most holiday shoppers. Let us take a stock of the consumer sentiments about the global ecommerce giant.
Consumer Behavior Report
Consumer Intelligence Research Partners today released analysis of consumer behavior for Amazon.com customers for 2014.The survey of 1,500 Amazon customers focused on the shipping method used and showed that Amazon customers increased their use of standard, paid shipping and media downloads during the first three quarters of 2014.
If we go through the stock trading charts of the ecommerce giant we can easily make out that since February this year it has been remarkably meandering around the $325 mark and has not lost any steam despite the new competitions. From here a little sales impetus from Amazon can actually send its share prices sky rocketing to the next higher level. Thus it can be deduced that even in the face of tough competition it has not lost any shine from its consumer’s side.
The CIRP survey suggests Amazon customer base is on the rise and the process is gradual and worldwide, which suggests that Amazon is not just an ecommerce leader of the west but is spreading its wings worldwide. Newer customers do not straight away subscribe into Amazon Prime. They first prefer checking out the buying experience before jumping into a larger commitment. However, going by the reports the conversion is also on the rise.
But a somewhat unlikely step from Amazon is the reduction in Super Saver as a percentage. This indicates that either new customers are making smaller purchases or they are buying more from the third party retailers for which super saver is not an option.
Though it would not be fair to come to a conclusion about this new move from Amazon however it looks that the marketplace model is working great for Amazon, where third party retailers sell through Amazon, and which does not offer Amazon Prime or Amazon Super Saver free shipping. It is also consistent with Amazon's overall revenue growth even as US Prime membership stabilized at 27-29 million members during 2014. This would mean that Amazon would now be able to save on the expense incurred in doling out the offers thus adding to its margins.
In all, this is positive for Amazon, which should be looking forward to an excellent holiday season.
Fire Phone set Amazon on fire
In recent news by Info World, the Fire Phone was lambasted as the worst mobile flop of the year, to quote from the news it said:
“The Fire Phone was all about serving Amazon's greed, not at all about its customers. When a company forgets that customers keep it in business, you get products like the Fire Phone - and executives who can't believe customers aren't as sheep like as they would prefer.”
To move the stock of the Fire Phone Amazon slashed its price last Wednesday by $250 to make the price tag look attractive at $199 and that too without getting tied into any carrier contract commitment.
Our understanding
Amazon despite of all the competitions has been able to maintain a steady revenue graph and a stable price trend which signifies its strength in terms of actual business and consumer affinity. Though there are lots of Amazon critics who really do not want to see the positive side of the ecommerce bigwig but the truth is that the way Amazon is moving from being a shopping name of the west to becoming a global brand holds a lot of offers for an investor in the long run. Though it did have its share of failures in the Fire Phone but yet it did not lose its popularity much as an ecommerce giant. Hence from an investor’s perspective Amazon can work wonders to a portfolio holding positions in the global ecommerce champion.
