Here’s Why Amazon is King
Unquestionably, undeniably, Amazon (NASDAQ:AMZN) came on the scene strong, making online shopping common and trips through traffic and crowded stores an increasingly unnecessary task. However, just because Amazon was one of the first to the party doesn’t mean it gets to take all the cake. In fact, others are trying to take back what was once theirs.
As Amazon powers along in the online retail business, traditional retailers have begun to throw money into online retailing. Companies like Best Buy (NYSE:BBY) have to contend with the high-speed, convenient, price-comparing shopping that Amazon offers, otherwise they could start dropping like flies as they simply become showrooms for customers to try products and then simply buy on Amazon. Many companies are expanding their online presence and building up some of their biggest online fulfillment centers to keep a competitive edge.
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CHEAT SHEET Analysis: Is Amazon going to lose?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. Since much of Amazon’s business comes from catering to customers who want to make purchases online, rather than in-store, it stands to reason that traditional retailers offering online shopping and purchasing will be taking back some of the sales Amazon had originally stolen from them. While Amazon doesn’t seem too at risk, due to its size, it does seem that its sales may diminish as traditional retailers migrate to the Internet, especially if they can offer competitive pricing.
However, for many people who like to shop around before deciding on a purchase, Amazon will still offer a price-comparing service that other retailers probably won’t. So, while retailers may keep their sales from being stolen entirely by Amazon, it seems unlikely that they will severely undercut Amazon’s own sales and sales strategy.
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