Amazon.com Inc.’s (NASDAQ:AMZN) Prime membership has been expanding. The company has introduced one and two-hour beer delivery service for Prime members.
The company has added hundreds of beer and wine products under its expanded delivery service in San Antonio, and other major cities in Texas.
Its inventory now includes alcohol-related products from national brands such as Michelob Ultra, Corona Extra and Josh Cellars, among others.
In addition to alcohol, Prime members can order pet supplies, groceries as well as electronics.
This extension will definitely attract more customers to the company’s Amazon Prime program, which is a significant revenue source for the company. Given that online alcohol beverage sales are estimated to grow 4.7% annually through 2021 to $772.3 million, Amazon is likely to gain significantly.
Coming to price performance, Amazon has outperformed the industry it belongs to on a 12-month basis. The company’s shares have gained 73.42% compared with the industry’s growth of 37.60%.
Bottom Line
It is important to understand the nature of Amazon’s core business. It is primarily an online retailer, and competes with the likes of eBay and Alibaba. This kind of business has a very low barrier to entry. It is cheaper to set up and faces significant competition. Online retailers also face competition from brick and mortar stores like Wal-Mart.
Therefore, carving a niche in this business requires a lot of marketing, an excellent customer-service model and a rational pricing strategy. To become a formidable player in this space, Amazon needs to consistently offer excellent services.
Prime Now is part of an enhanced delivery strategy, which is an important growth driver for Amazon.
As the perks of Prime members increase, subscription rises, expanding operating margins of the company in turn.
Amazon.com, Inc. Price and Consensus
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Last year, it generated $8 billion in global revenues. By 2020, it’s predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce “”the world’s first trillionaires,”” but that should still leave plenty of money for regular investors who make the right trades early.
