When investors think of Amazon.com, Inc. (AMZN), they usually think of it somewhat one-dimensionally: Amazon does e-commerce, and it does e-commerce really, really well.
True, yes; but it’s time we also acknowledge Amazon as an electronics heavyweight, because that’s also what it is.
The company announced sales of Amazon devices tripled year-over-year this Black Friday weekend. AMZN devices dominated across the board: Amazon Fire TV sales were six times higher than last year’s figures, Amazon Fire tablets numbered in the millions and the Amazon Echo smart speaker and virtual assistant claimed the the top-selling $100-plus item spot.
Not quite. By doubling down on devices this shopping season, AMZN is doing what it does best — playing the long game to further entrench itself as the go-to online retailer.
Making Shopping Easy
Amazon’s ultimate goal isn’t actually to battle Apple and Samsung (SSNLF) for supremacy in the tablet game. It would like to be a central part of your living room, and the fact that it banned sales of Google Chromecast on its website telegraphed the company’s ambitious vision for Amazon Fire TV and the Amazon Fire TV Stick.
But the endgame here is making buying products on Amazon.com even easier. AMZN isn’t laughing all the way to the bank by selling Fire tablets at $50 a pop, or $250 for a six-pack. Not on day one, at least.
Instead, AMZN can reap its rewards over the long haul, as users buy apps, e-books and maybe watch a little Amazon Prime Video in the process. Of course, you have to be a Prime subscriber ($99/year) to do that, and once you’re a Prime subscriber, you’re compelled — and statistically more likely — to buy more stuff on Amazon.
Amazon.com itself is also prominently featured, of course.
While the real source of Amazon’s recent profitability has actually been its cloud computing arm, Amazon Web Services, the success of that division is merely serving as a financier for the company, as it promotes absurd deals like six tablets for $250. Eventually AMZN will be able to coast along on its own, as it builds a wider, more loyal customer base.
As is the case with most Amazon initiatives, the corporation is focusing on making the customer experience as effortless and convenient as possible, and if Amazon can control all aspects of your interaction with it (including the very hardware you interact with it on), it can be more confident in building a long-term customer relationship.
Next step? Amazon drones, which, according to a recent Amazon Prime Air promo, will be able to deliver your daughter Millie a last-second pair of cleats before her soccer game … within half an hour. (Stuart the bulldog ate one of them).
We’ll have to wait on the FAA to clear the drones, but in the meantime, Amazon devices will be whizzing off the shelves regardless.
As of this writing, John Divine was long AAPL and AMZN. You can follow him on Twitter at @divinebizkid or email him at email@example.com.
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