- Amazon continues to execute an aggressive growth strategy.
- Drone technology and AWS are likely to be game changers for the stock.
- Amazon has the aim of being 'everything to everyone' and they are well-placed to achieve that.
Amazon (NASDAQ:AMZN) has executed an aggressive multi-faceted growth strategy in 2015. And they have laid the foundations for more growth in 2016. In fact, it has other retailers sweating as they struggle to keep up with such an innovative company. Plaudits aside, this growth isn't without resistance from competitors. For instance, Target (NYSE:TGT) and Walmart (NYSE:WMT) have chosen to go the ecommerce route. In fact, Walmart plans to invest as much as $1 billion in this area.
A few days ago, Amazon announced drone delivery for launch in the near future. From a consumer perspective, this will make buying from Amazon more convenient, and fast. Plus, it will mean that items can be ordered in a sort of emergency; for instance when one has forgotten to buy a birthday present. However, from an investor's perspective, this is likely to be an absolute game-changer.
You see, drone delivery not only allows Amazon to cut down on costs over time, but it also allows them to increase their inventory significantly. It allows Amazon to compete with grocery stores, and take more market share from 'traditional retailers'. For example, a consumer could order all their food shopping and get it delivered to their home in approximately half an hour. Plus, Amazon is likely to be able to negotiate deals which will allow them large economies of scale.
When we consider that consumers are choosing to do more of their shopping online, this plays nicely into Amazon's favor. Amazon is yet to reveal numbers from Black Friday and Cyber Monday; however, all indication points to it being record-breaking.
Interestingly, Amazon has failed to report significant profits, but the Amazon stock continues to go from strength-to-strength. This is due to the fact that bullish investors are comfortable with Amazon's long term growth strategy. They are going through a 'fasting period' right now in terms of significant profit but it is hoped that investors will see strong returns in the future.
Amazon Stock performance
To say that Amazon stock has performed well in 2015 would be understating their performance. With an earnings growth of 117.89%, they are really pulling ahead of their competitors. Therefore, their stock has shot up by approximately 102.50% in the past year, and investors who trusted in Amazon last year have more than doubled their investment.
Moreover, Amazon Web Services is on track to surpass $7 billion in revenue and this will add significant strength to Amazon topline.
It is worth noting that trees in the Amazon don't grow forever. However, the world's biggest online retailer still has a long way to go. Its investments are bearing fruition at just the right time. And key numbers such as the more than 40 million subscribers in their Amazon Prime program mean that customer loyalty is high.
In conclusion, the bubble of Amazon growth is far from bursting. They continue to expand the reach of their ecommerce platform, and continue to outperform the competition. Drone delivery and AWS will be key factors for growth. They want to become the one-stop-shop for everything consumers might need, and that should leave other retailers quaking in their boots.