What a deal changer in terms of the amount of time it takes to receive a product. Instead of three days, people will soon count on two, one, or maybe the Holy Grail in mail order, same-day delivery.
In order to lower the time between a customer pushing the "order submit" button and delivery, Amazon must sacrifice a portion of the efficiency that allows it to remain competitive against retail stores. Instead of focusing on costs, Amazon is moving closer to the retail model.
Is the retail or near-retail market really the place Amazon wants to go? Amazon must know the competitive landscape in retail is significantly different from mail order.Best Buy's (BBY) primary business model is retail, and we can see how that has worked against lower-cost online competitors Amazon and eBay (EBAY). But is it only "showrooming" from Amazon's customers inside Best Buy that resulted in lower revenue and earnings for Best Buy? I believe Best Buy's greatest competitive environment is from other retailers, not Amazon. Other stores appear to sell the same or similar products. Target (TGT), Sears (SHLD) and the retail elephant Walmart (WMT) offer the lion's share of products available in Best Buy. Instead of focusing on cost control, improving margins and remaining competitive on price, Amazon is counting on greater sales (and maybe earnings) from falling delivery times. Amazon is losing its greatest competitive advantage. If you regularly buy products on eBay and Amazon, you know many of the products are offered by the same merchants and Amazon allows third-party sellers to list products. What you may not know is that the selling fees for eBay average less than the selling fees on Amazon. This is why you may have found the same item sold by the same merchant for more on Amazon than on eBay. Amazon's merchant fees are gravy compared to selling its own products, and are needed to have an expansive inventory.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV