Amazon AMZN is leaving no stone unturned to bolster its presence in the retail sector.
Reportedly, the company is going good old-school with its plan of publishing toy catalogs for holiday season.
Notably, these catalogs will give a clear idea to the people regarding the options of toys and games available on its e-commerce platform. The customers will also get the product description from these catalogs.
The catalogs will be handed out to the customers at Whole Foods stores and mailed to the U.S. households as well.
Increasing Focus on Retail
Amazon’s aggressive retail strategy, expanding seller base and distribution strength will continue to benefit it in gaining traction in the retail space. The latest plan to publish toy catalog is sure to give the company a push in this regard.
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. The positive growth projection bodes well for Amazon.
The recent move of the company emulates Toys “R” Us which used to have a similar kind of catalog called “Big Book”.
The over-utilization of technology, particularly smartphones, has been negatively impacting the health and wellness of kids. This has become a serious concern for parents as well as technology companies like Apple.
Hence, Amazon’s move to publish a printed catalog is a welcome change for parents, in this regard.
The adoption of traditional retail strategies like this is expected to drive growth of its e-commerce business as well. Amazon had tried out this strategy during the holiday season of 2007. Since then the company has been gaining traction in the market.
Apart from toy retailing, the acquisition of Whole Foods has strengthened Amazon’s position in the grocery retail market. Further with the recent announcement of the acquisition of PillPack, the company has forayed into the pharmacy retail sector.
We note that the company’s increasing focus toward strengthening retail e-commerce business with a plethora endeavors like the ones mentioned above will continue to help it to reap benefits from this growing sector.
Intensifying Competition
Amazon’s strong efforts to deliver the retail services via its e-commerce platform will continue to fortifying its competitive position in the retail market.
With the latest move, the company is likely to gain competitive edge against the likes of Walmart WMT, Target TGT and other brick-and-mortar shops which are involved in the toy business.
In fact, both Walmart and Target have already implemented steps like the one Amazon is planning to take. These companies provide toy catalogs to customers in order to sustain market share. Reportedly, Target is increasing the number of toy shelves for this holiday season.
Now coming to market share, Amazon holds a dominant position in the online U.S toy sales per the latest report from Internet Retailer. Per the report, Amazon accounted for the highest share in the sale of four major toy brands namely — Lego, Mattel, Hasbro and Nintendo in 2017.
Per the report, Toys “R” Us and Walmart were left trailing Amazon as the company’s shares in the above mentioned brands were 88.9%, 83.3%, 85.2% and 92.4%, respectively.
Walmart accounted for 5.9%, 5.8%, 2.1% and 6.1% and Toys “R” Us accounted for 5.1%, 10.9%, 12.7% and 1.5%, respectively.
Consequently, it can be concluded that the latest move of Amazon along with the recent bankruptcy of Toys “R” Us will help it in maintaining its dominant position in the U.S. toy market.
Zacks Rank & Stock to Consider
Currently, Amazon carries a Zacks Rank of #3 (Hold).
A better-ranked stock that can be considered in the retail-wholesale sector is PetMed Express PETS carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for PetMed Express is currently pegged at 10%.
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