Amazon.com Inc.
(
AMZN
) has recently announced the launch of its new virtual wine
marketplace, offering customers an opportunity to shop from a
selection of more than 1000 domestic brands of wines.
Amazon Wine will feature selections from some of the big
wineries in the United States, including Francis Ford Coppola,
Hall, Mark Ryan, Eden Canyon, Pepper Bridge and Roadhouse.
Additionally, the website will provide detailed information about
individual wines, including their composition, alcohol content
and American Viticultural Area (AVA).
Management stated that customers could order up to six bottles
of wine for $9.99, without having to pay any shipping cost.
Currently, the shipping service will be available in California,
Connecticut, Florida, Idaho, Illinois, Iowa, Nebraska, Nevada,
North Carolina, Oregon, Washington, Wyoming and the District of
Columbia.
Amazon had tried to enter the virtual wine market a few years
ago but could not take its plans ahead due to strict regulations
governing the sale and delivery of alcohol across the U.S. state
borders.
According to a study conducted by MarketResearch.com, the U.S.
wine market is expected to touch $33.5 billion with 871 million
gallons of wine sales by 2013. The study forecasts that wine
shipments will expand at a compound annual growth rate (CAGR) of
over 3% from 2010 to 2013.
Amazon is one of the leading players in the extremely
fast-growing retail ecommerce market and its strength lies in its
huge scale of offerings, its broad reach and platform approach.
We believe the market leader should continue to grow as long as
the market is expanding.
At the same time, we think that there is a certain amount of
uncertainty regarding Amazon's investment plans, which could
pressure earnings in the near term.
At the moment, however, most of Amazon's competition (whether
direct or indirect) continues to come from
eBay Inc.
(
EBAY
),
Apple
(
AAPL
),
Barnes & Noble, Inc
. (
BKS
) and
Google
(
GOOG
).
Currently, Amazon has a Zacks #4 Rank, which implies a Sell
rating in the near term.
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