Amazon.com, Inc. (NASDAQ:AMZN) stock continues to climb, with gains of 30% since the start of the year — more than double the performance of the Nasdaq index. Next week, Amazon will have what is arguably its most important shopping day of the year: Prime Day.
While many associate the winter holidays as the most important period for retail, the e-commerce giant’s best day is actually in the middle of summer. The one-day sale offers impressive discounts to Prime members.
This Prime Day is particularly notable, though, for one big reason: the company’s recently opened brick-and-mortar bookstores will be participating. Since Amazon first debuted, it’s been known as an online retailer. It was the world’s first online bookstore in its earliest days, but has since expanded to become an online-everything store. Only in recent years has AMZN taken the opposite approach of most retailers and begun opening brick-and-mortar options to supplement its already-huge online footprint.
Amazon’s recent purchase of Whole Foods for $13.7 billion marked the largest brick-and-mortar addition to the company’s portfolio. But, the announcement of physical bookstores is interesting because the high-tech style of the stores is, perhaps, a preview of what Whole Foods locations (and any other brick-and-mortar expansions) might look like.
As you may remember from the original store announcements, shopping at an Amazon bookstore is very much like shopping online, just in-person. Shoppers can use a mobile app, search and look up reviews, and they don’t have to wait in a checkout line, either. Transactions at the store have been described as “seamless — as long as you are a Prime member and have downloaded and installed the app”).
This Prime Day (July 11), shoppers will also be able to log into their Prime accounts at checkout and access the aforementioned discounts.
Amazon Prime Day Results Will Tell the Tale
Because Prime Day is the biggest day of the year for AMZN, it offers a great litmus test for the brick-and-mortar bookstore concept. Will all the other online deals keep shoppers glued to computer screens? Will discounts serve as a great lure into physical stores and perhaps begin a snowball effect of sorts? Will random shoppers who wander into the stores become new Prime members?
Amazon Prime membership was at least 66 million at last count, but management failed to reveal the exact growth rate of membership during its last earnings call, even though those figures have been released every year since 2013.
Jason Del Rey at Recode guessed that means one thing: “Prime membership growth is decelerating quicker than it did from 2014 to 2015 and Amazon doesn’t want to reveal that.”
Still, Amazon is on tap to grow earnings by nearly 30% over the next five years on the back of approximately 20% sales growth. A slight deceleration in Prime membership wouldn’t mean doomsday, either. And, the brick-and-mortar push could indeed accelerate growth dramatically.
Amazon stock investors should keep an eye on any news about bookstores’ debut after this year’s Prime Day to see what may be in the cards for the future.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.