This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Amazon and the Coming Onslaught

Stocks in this article: AMZNAAPLEBAYWMTTGTGOOGFBSHLD

NEW YORK ( TheStreet) -- You may not guess it by looking at the chart, but Amazon.com (AMZN) is in a tough spot.

Its disciples are fully convinced the company is able to continue growing as other stronger players in retail sit idly by and watch it happen.

Even with the incredible growth Amazon has enjoyed, the truth of the matter is that its operate on razor-thin margins, and a large portion of sales come from other smaller retailers that use Amazon as a marketing platform. (See 6 Bullish Stocks Paying Big Dividends. )

Many small companies believe as a result of Amazon collecting sales tax in more states, including just recently in California, their businesses will grow or, at a minimum, will not continue falling apart because of an uneven playing field against online merchants.

I wish these smaller companies luck because it's not enough.

People buy products online for many reasons, and sales tax is only a small part. People don't care if they pay sales tax and/or shipping charges. People are smart enough to compare the total cost of a product from a Web site to its cost at a retail store. For most products, adding in sales tax is not going to level the playing field and put pricing from bricks on par with pricing from clicks.

That said, some items are best-suited for sales in the online world, and some products are best-suited for retail stores. The differences can be seen with a couple of recent purchases my family made. ( TheStreet's Ed Ponsi has interesting thoughts on Amazon in Signs of Deterioration . You need a Real Money Pro account to read, but any serious investor should have one.)

My son Brenton needed a new bike. I looked online and quickly discounted buying online due to the assembly required. Sometimes assembly is worth it, such as when I bought an air-hockey table from Sears (SHLD). (I posted hourly updates on Facebook (FB) while I assembled the table at 4 a.m. on Christmas evening.)

Wal Mart (WMT) and Target (TGT) offer bikes for sale and they assemble them. You can't beat the deal for a $200 kid's bike. Even if Amazon moves to the point of same-day delivery, its offering of items requiring a great deal of time to assemble -- also sold inexpensively at retailers -- isn't an edge.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,677.90 +216.58 1.32%
S&P 500 1,950.82 +23.71 1.23%
NASDAQ 4,452.7920 +69.9450 1.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs