Markets & Investing
Amazon is Picking Up Speed
25 Feb 2016
There haven’t been many companies in the history of capitalism that are this good at just about anything. In fact, there aren’t any at all. Amazon is a diamond in the rough, a company that seems to find ways to succeed in penetrating just about every aspect of consumers’ lives in a good way. (OK, let’s just forget about the Fire Phone already).
Solving the shipping concerns
One of the reasons Amazon failed to deliver a great quarterly report last month was because shipping costs jumped a staggering 32.8% year over year. With the introduction of Prime Now shipping and its increasing popularity around the holidays, Amazon needed a solution, and fast.
That happened earlier this week when the company announced it would hike the minimum order for free shipping to $49 from $35. While many will complain, as they did when Amazon increased the minimum order value to $35 from $25 in 2013, this is good news for investors because it’s likely to encourage Amazon users who have been sitting on the fence about signing up for Prime to pull the trigger.
Fashion company
With Amazon spreading its influence in just about every direction, it wouldn’t surprise you to hear that the company has silently launched seven in-house clothing brands on its site.
Amazon has been in the fashion category for some twelve years now, and, not surprisingly, it hasn’t done too well. People go to the website for convenience and low-cost goods. When it comes to clothing, however, they’re generally looking for better-known brands.
This can change all that, says KeyBanc’s leading retail analyst Edward Yruma. “They’re being very strategic about this,” said KeyBanc’s leading retail analyst Edward Yruma in an interview with CNNMoney. If Amazon is successful in this initiative, it could be “disruptive to the whole industry.” Some analysts are even estimating that Amazon’s profit margins with its new clothing lines could be twice the industry average.
Indie studio
It seems Amazon is taking its role as a serious original content provider seriously. While it may not compete with Netflix on many things, this isn’t one of them. It’s been reported that the company or Woody Allen’s next movie — a huge increase over what Allen got from Sony Pictures Classic for his last movie, which was $1 million.
It’s also done deals with indie directors Jim Jarmusch, Spike Lee, Todd Solondz and Terry Gilliam. Targeting culture film buffs, the company hopes to increase Prime membership, as subscribers will be able to watch all of these films for free.
Conclusion
Amazon has always impressed me. While it continues to irk Wall Street for its lavish spending and general lack of earnings, those who understand Amazon know there’s a point to it all. This company isn’t just building itself for the future, it’s building the future for the rest of us. Putting itself in a position to provide solutions for just about anything consumers can think of, Amazon is picking up steam and there’s nothing I can think of that can stop it.
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