Amazon Diversifies And Moves Forward With Intent

  • As a retail behemoth, Amazon has gone from rags to riches.
  • Their acquisitions portfolio is impressive, and built for the future.
  • Financially, Amazon is doing well, and has room for growth as consumers continue to spend more money online.

One can't help but be astonished by the Amazon (NASDAQ:AMZN) story. This is a company which began as a bookshop, and has now grown to a global ecommerce retailer with a market cap of $315 billion +. In fact, it is now the world's largest ecommerce business, and has giants such as Walmart (NYSE:WMT) and Target (NYSE:TGT) scrambling to keep up. Just to put Amazon's exponential rise into context, an investor with the foresight to buy Amazon in 2000 and hold onto it till now, would have enjoyed a more than 600% rise in stock value.

Regardless of their conquests, this behemoth continues to diversify while maintaining their world famous customer service. In fact, Amazon's insatiable appetite for growth and the perfectionist attitude of their CEO has drawn some criticism.

A company can't grow so quickly, and become a market leader without making power moves in a timely manner. Amazon's main strengths lie in their foresight in spotting lucrative opportunities. As a result, they have been able to diversify their interests, and move forward aggressively.

In fact, some people might argue that Amazon's main aim is to establish some kind of Monopoly. What we know for certain is that they are looking unstoppable and well established for a strong 2016. Let's delve into some of the reasons why.

Diversification

Amazon has been able to leverage the millions of daily visits to its sites in order to sell their own products and services. For instance, the Kindle reader was first released on November 9th 2007. As testament to Amazon's great foresight, the world had never seen anything like it. It allowed consumers to buy books and have them receive it instantly. The Kindle has gone on to sell in the millions, increase book sales, allow Amazon to create devices on the back of its success, and add considerable revenue.

Additionally, Amazon has gone on to launch Amazon Prime in a bid to increase loyalty and average revenue per sale.  Moreover, Amazon acquired Lovefilm and have been able to create a compelling streaming service in the shape of Amazon Prime video. They don't stop there because they even have a Spotify competitor in the shape of Amazon Prime Music. The ecommerce giant gambled on the notion that Amazon Prime and its 'free' benefits might keep consumers tied to their brand.

This gamble has paid off big time because as of writing, Amazon Prime membership numbers stand in the tens of millions.

Interestingly, in August of 2014, Amazon made the decision to buy Twitch- a video game streaming site which had just over 50 million visitors a month. At the cost of a billion dollars, in an all cash deal, it wasn't cheap; however, what it bought Amazon was access to a community of young people willing to spend a lot of money on entertainment. It won't be surprising for Amazon to combine Twitch with its main products in order to gain considerable revenue.

Finance

In the past, Amazon has struggled with showing significant profit in their balance sheet. This was usually due to the fact that they kept reinvesting.

Financially, Amazon is currently doing well with regard to some key metrics. For instance, during their latest Q3 results, they exceeded expectations. For example, revenue came in at $25.4 billion, when analysts were expecting $24.9 billion.

Quarterly revenue increased by an astounding 24% as compared to Q3 of 2013. Additionally, Amazon Web Services, which powers online giants such as Reddit, had a revenue of $521 million, $7 million shy of the operating revenue for Amazon's entire North American division.

Amazon also owns Zappos, Alexa, and Goodreads.

Conclusion

In conclusion, Amazon is poised for a good Christmas season, and an impressive 2016. The only question is taking their performance into account, who can stop them?

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  • I do not have any business relationship with the companies mentioned in this post.
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