Amazon AMZN has rolled out new online stores for school and college essentials namely “Back to School” and “Off to College” in a bid to fortify presence in retail e-commerce business.
With the latest move, the company aims at providing all the necessary as well as fun items required by students in schools and colleges. This move in turn will aid it in expanding product portfolio and offerings.
Moreover, the additional facilities attached to these stores like fast delivery service, Prime benefits and other student friendly services will be beneficial for students, parents and teachers as well.
With all these facilities, the company strives to attract customers to these stores. Additionally, this move is in sync with the company’s strategy of reinforcing footprint in e-commerce sector as well as retail industry.
Notably, shares of Amazon have returned 42% on a year-to-date basis, outperforming the industry’s rally of 21.1%.
Key Benefits
Amazon is providing multiple ways to shop at these online stores in an attempt to enhance the customer experience.
The shoppers are allowed to access these stores anywhere and anytime from the extremely popular and downloaded Amazon App. Further, the stores are accessible from AmazonSmile, Amazon.com in Spanish and Amazon Business. Additionally, shopping can be done using Echo devices as well.
These initiatives will enable the company to offer basic needs of schools and colleges like sports, music, lab equipment and materials as well as charity donations. These are further enriched by its availability in Spanish which is the preferred language of several customers.
Moreover, customers are allowed to avail the Prime benefits like Prime Wardrobe, Prime savings at Whole Foods Market, Prime delivery services like free two day, one day, same day and two-hour deliveries.
All these benefits are likely to lure more customers to Amazon’s e-commerce platform. This is in sync the company’s intentions of improving the customer base, in turn aiding the revenue generation.
E-Commerce Sector Holds Promise
Amazon has been dominating the e-commerce domain with its aggressive retail strategy, expanding seller base, enhanced delivery services, strategic acquisitions and partnerships.
According to data from Statista, revenues in this sector are expected to hit $1.7 trillion in 2018 and $2.5 trillion in 2022 by growing at a CAGR of 9.6% between 2018 and 2022.
The company is well poised to reap benefits from this sector which holds immense potential with its huge product base on its new Back to School and Off to College online stores as well as its shopping app.
Strengthening Competition Against Walmart
Amazon has gained a competitive edge against Walmart WMT with its latest move, and consequently competition intensifies in the retail sector. Notably, cut-throat competition is the norm in the retail space.
According to the latest report from Mordor Intelligence, the global retail industry is anticipated to grow at a CAGR of 5.3% between 2018 and 2023 and to reach $31.9 trillion by 2023.
Both the companies are trying to improve their market shares in this rapidly growing market with their own retail strategies. Walmart also possess similar shopping sections on its website like the one Amazon has launched. They are called “Back to School” and “Back to College” which stocks all necessary and luxurious products required by the school and college students.
Products available in these sections include books, stationery items, bags, clothes, shoes, toys, games, accessories, electronic devices, dorm requirements like bedding, desk, chairs and many more essential and luxurious items.
Amazon’s new online stores also include these products. Both the companies provide same day delivery services to improve the customer experience. However, Amazon scores a little better on this front as it is likely to provide more benefits with its strong Prime services and other benefits as well.
Additionally, Amazon allows the college students to purchase, rent and sell the books they want. Further, they can avail Prime Student which is a membership program that offers shopping and entertainment at a much lesser price than the actual Prime membership.
Further, school students belonging to the age group of 13 to 17 years are allowed to have their own login credentials under their parents’ account and shop as per their own interests and needs. Parents can set a limit to their children’s spending and also share their Prime membership with their children at no extra cost.
Consequently, we believe Amazon will continue to strengthen its competitive position against Walmart with strong services and facilities that are useful and convenient for the customers.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that can be considered in the retail-wholesale sector are Groupon GRPN and PetMed Express PETS. While Groupon sports a Zacks Rank #1 (Strong Buy), PetMed Express carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Groupon and PetMed Express is currently pegged at 6.5% and 10%, respectively.
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