WSJ – The shift to online shopping has already turned Amazon into a behemoth, and is often cited as a factor in the decline of traditional stores.
And while it’s true that all the brick-and-mortar giants — sorry, we mean “four-wall giants” — are scrambling to build out their own internet operations, that’s only part of the story…
Even on the friendliest turf for online shopping — computers and electronics — Internet stores are claiming just 25% of the market.
I doubt anyone thought of online shopping as a value space. But here it is.
It’s stats like these that expose the brilliance of Amazon’s strategy. Not satisfied with crushing the brick and mortar model, the company beats out online retailer competition on pricing at the expense of its margins. And that’s ok.
Whether brick-and-mortar locations can successfully build out their online businesses and compete long-term against Amazon remains to be seen. But the latter’s already got almost 240 million active customers and entrenched competitive advantages.
I don’t want to be crucified for using the words value and Amazon in the same sentence. I mean we are talking about a stock that’s trading at about 630x earnings. But I think detractors just aren’t factoring in its stranglehold of an industry that’s going to get so much bigger. That’s also discounting the inevitability of price increases down the road.
There’s just so many potential catalysts going forward here. And we’re not even bringing Amazon drones into this equation yet.
Yet.
CentricFringe 