Amazon.com Inc. (AMZN, Financial) serves consumers through its retail websites and focus on selection, price and convenience. The company offers programs that enables sellers to sell their products on its websites and their own branded websites and to fulfill orders through them, and programs that allow authors, musicians, filmmakers, application developers and others to publish and sell content.
The company designs its websites to enable millions of products to be sold by the company and by third parties across dozens of product categories. Customers access its websites directly and through its mobile websites and apps. It also manufactures and sells Kindle devices.
Performance So Far
On a full-year basis, revenue is expected to hit an all-time high of $73.7 billion, 20.6% higher than the $61.1 billion that management reported in 2012. Over the past four years, revenue growth at Amazon has been explosive. Between 2009 and 2012, the company saw sales rise 149.3% from $24.5 billion to $61.1 billion. The supply chain worked well in 2012 with $61Ă‚ billion in sales. There will also be additional emphasis on the revenue outlook for the fourth quarter as it reflects the holiday spending season.
Amazon recently announced that it had created a new Grocery and Gourmet Food department at Amazon.ca, and it boasts more than 15,000 dry food products, most of which are eligible for Prime or super saver shipping. Â Since the start of the year 2013, Amazon.ca has “more than doubled” its offerings in the grocery, auto, toys and office categories. According to Comscore, unique visitors to Amazon.com in November of 2013 were 114 million.
Growing Trend
Innovation can be a powerful growth driver for your portfolio in the long term. A company like Amazon is positioned to win by leading technological change in retail, video and travel, respectively. The company is spending its money aggressively in areas like technology, content and infrastructure. Amazon has gone from an online bookstore to a major retailer selling almost anything, from diapers to electronics. The company has also expanded to other business areas with intriguing prospects like online content, hardware and cloud computing services.
Amazon continues to grow its share of the retail market, likely growing faster than its smaller rivals. It also continues to build a digital ecosystem that is now ripe with 27 million digital media items, including movies, shows, tunes, magazines, books, audiobooks, games, and apps. In October 2013, the Seattle-based company announced it plans to hire 70,000 temporary workers at its fulfillment centers for the holidays, up 40Ă‚ percent from the previous year.
India Connection (Launch in India)
For U.S. e-commerce companies, some of the most tantalizing expansion opportunities lie in India. India’s Department of Industrial Policy and Promotion published a report earlier in January weighing whether it should relax regulations for online retailing and has asked e-commerce companies to register their opinions by Jan. 30. U.S.-owned companies are pushing hard to change the rules, says Amit Agarwal, Amazon India’s vice president and country manager. U.S. companies have found a way to do business while they await the Indian government’s decision. They’re allowed to deliver and store goods on behalf of Indian merchants and are building local delivery and storage businesses and investing in e-commerce startups.
Amazon established an Indian online marketplace in June where merchants can hawk their wares and pay the company fees to store and deliver their goods. More than 2,300 sellers have signed up, listing 440,000 products including books, electronics, diapers and jewelry, says Agarwal. That’s more than Indian e-commerce pioneer Flipkart. Amazon said on Jan. 20 that it plans to open a 150,000-square-foot warehouse in Bangalore, matching a facility it maintains in Mumbai, to speed deliveries.
To End
Amazon is clearly the most disruptive force in the retail industry over the last years. Its cost advantages, innovative drive, scale and customer focus have allowed the online retailer to gain participation in different categories in a relatively short period of time. This Seattle-based Fortune 500 company will certainly make headway in the coming years. Amazon is trading near an all-time high following an upbeat holiday shopping season, dominant market position, and improving margins. This trend is expected to continue further and it is expected to create greater shareholder returns.
