This Day On The Street
Continue to site
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

Amazon and the Coming Onslaught

I believe it makes better financial sense for those seeking exposure in retail to look again at stocks like Wal-Mart, Target, Google (GOOG - Get Report), eBay (EBAY - Get Report) and Apple (AAPL - Get Report), rather than Amazon.

For example, too much media attention has been made about Amazon's move into next-day and even same-day delivery plans. This is something that is already offered by others with a much lower earnings multiple.

Wal-Mart offers online ordering and pickup at the store; Wal-Mart's sister store, Sam' Club, even offers this service for bulk wholesale purchases. Wal-Mart also has almost ten times the sales revenue as Amazon. It is virtually impossible to imagine Amazon ever having the ability to out-negotiate vendors for product pricing over Wal-Mart. If Amazon doesn't have a product price advantage, what do they really have over Wal-Mart?

Demonstrating another advantage over Amazon is Target, which allows customers to return online purchases to their local Target store. Target is also much larger than Amazon by total revenue. In the physical product marketplace, both Wal-Mart and Target sell more than Amazon. Wal-Mart and Target also sell at higher gross margins than Amazon.

In the digital world, Amazon is under a total assault by Google, eBay, and Apple. Investors should anticipate other entrants not currently in the space. For example, Facebook may ascertain an opportunity in "renting" virtual mall space, not unlike Amazon's merchant program.

Anything sold in the virtual world is no further than two mouse clicks away from another site selling the same product. Google is actively working to promote shopping comparisons and has a payment system in place.

Additionally, the book/eBook market Amazon has so successfully dominated is already showing signs of cracks. Apple is selling greater quantities of eBooks and undercuts Amazon in pricing for many of them. eBooks now outsell physical copies and anyone with a website can sell an eBook.

With such a low barrier to entry, it's just a matter of time before selling eBooks at the retail level is a loss leader to bring customers to the site. This is not unlike how gas stations operate, except when you only offer digital products, you have no pricing power.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
AMZN $659.59 0.00%
EBAY $24.43 0.00%
GOOG $693.01 0.00%
TGT $79.50 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs