Amazon.com (NASDAQ:AMZN) stock has garnered a fair number of headlines lately, as usual. But this time around some of those headlines were a bit surprising.
The most interesting was Democratic presidential hopeful Senator Elizabeth Warren suggesting that the big tech firms — Google (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Amazon — should be broken up.
This is certainly an attention-grabbing headline, though few investors felt even one goosebump rise on their arm. It’s an interesting concept, to be sure, especially when another headline this week revealed that 74% of American shoppers go to Amazon when they’re ready to buy a product.
Now, that doesn’t mean they ultimately buy the product there, but it certainly demonstrates the magnetic pull Amazon has over consumers and their belief that it is always competitive on price and the product they want is available there.
AMZN Stock’s Advantages
Essentially, Warren’s point is that AMZN both owns the platform and also, through its deep knowledge of its customers, is always looking to build its own retail brands to compete with its most popular suppliers.
A recent case in point is the fact that AMZN has announced that it’s launching a line of its own skincare products.
You can assume that thanks to its cloud-server subsidiary Amazon Web Services (AWS), the largest cloud provider in the world, it has been crunching its big data on market sectors where it can make a move.
And now it seems it has found an opportunity.
The new line will be called Belei and will include moisturizers, eye cream and spot treatments. The products will fall in the $9-$40 range, which puts them at price points to compete with companies that target the low- and mid-range customer.
As it launches this line, AMZN has nearly 140 private label brands now that are in competition with other vendors on its site. And this move will also put it into competition with not only large cosmetic brands but also stores like Ulta (NASDAQ:ULTA) and Sephora.
AMZN stock has also talked about adding more private-label food brands for its e-commerce and Whole Foods stores. But that is a low-margin business, so it’s likely that other products with prospects for higher margins will launch first so they can supplement that aspect of its expansion.
But the even bigger deal is on the payment processing side of things. As usual, the back office stuff doesn’t really get the play that the consumer news does, but this could be significant in coming years.
AMZN has just signed a deal with global payment processor Worldpay (NYSE:WP) — which was just purchased by FIS for $43 billion. Initially, this will allow AMZN to offer Amazon Pay to merchants so they can offer it as a payment and shipping option to their customers.
This will expand Amazon’s global reach to merchants and customers and has significant implications for its growth in coming years. While its long-term plans aren’t being revealed, it’s certain that AMZN stock knows what it wants to do and this deal makes its global ambitions a lot closer to reality.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.