Its early November and Amazon.com, Inc. (NASDAQ:AMZN) is already gearing up for the holidays — and that’s joyful news for AMZN stock.
In addition to adding 120,000 temporary workers to help fulfill orders, Amazon is also cutting prices on items sold by third-party sellers, rolling out an Etsy Inc (NASDAQ:ETSY) competitor, and discounting ultra-popular smart home products. All together, the moves set up Amazon to have a dominant holiday 2017 sales showing.
Given the already bullish sentiment on AMZN following blowout third quarter numbers, robust holiday 2017 sales numbers should easily propel AMZN stock to new all-time highs.
As such, now seems like a great time to get into AMZN stock before the holiday hype gets priced in.
Why Amazon Will Dominate the 2017 Holidays
Here are the four reasons why I’m bullish on AMZN stock ahead of the holiday shopping season:
1) It’s worth noting that Amazon is hiring 120,000 temporary workers this year to fulfill holiday orders. That is on par with last year’s number and is a sign that Amazon expects yet another strong holiday period. Under-performing retailers like Macy’s Inc (NYSE:M) and Nordstrom, Inc. (NYSE:JWN) have seen temporary holiday hire numbers come down in recent years to accommodate for lower holiday sales volume.
2) Amazon is now extending its discounts to products from third-party sellers. Essentially, Amazon plans to list a discounted price for the product on Amazon, pay the full price to the third-party seller, and make up the difference itself. Its called “discount provided by Amazon”.
This is a huge move because it will make Amazon the price leading marketplace during the most important time of the year for retail. Marketplaces continue to win out over traditional retail because they offer better prices and a broader selection. Now, Amazon will be the clear price leader in the favorable marketplace sector. Connecting dots, its easy to see how this “discount provided by Amazon” tactic could lead to a huge holiday sales boost for AMZN.
3) Amazon is set for a big boost from the sales of arts and crafts products. Amazon just launched its Handmade Gift Shop, which is a play on the digital arts and crafts market that Etsy dominates. This is a big growth market (revenues are growing nearly 20% year-over-year at Etsy), and Amazon can easily leverage its size, resources, and low-cost base to quickly take market share.
4) Smart home products are set to have a big holiday season and Amazon will benefit immensely from this. Smart home product demand has been ramping all year long, and it certainly feels like that demand will run wild this holiday season. This is a great thing for Amazon, which is the unit-share leader in the smart home market. That leadership position is growing ahead of holiday season 2017, and Amazon is running deep discounts on smart home bundles. The combination of growing popularity with low prices should lead to big revenue gains.
Bottom Line on AMZN Stock
The October 2017 earnings report put AMZN stock back on its solid uptrend. AMZN stock was stuck in neutral for the better part of the summer and into the fall. Robust growth numbers in the October 2017 quarterly print changed that, and sent shares flying higher.
With AMZN stock back on track, sentiment feels like its building to be more bullish than ever. If holiday 2017 sales number are very good, then AMZN stock could be at the beginning of a sharper-than-usual upturn.
Consequently, if you buy the thesis that Amazon is going to dominate holiday season 2017, then buying AMZN stock now seems like a very smart move.
As of this writing, Luke Lango was long AMZN.
