) plans to feature products of various suppliers on its website
to strengthen its grip on the online retail industry, according
to a Wall Street Journal report.
Reportedly, Amazon is in talks with 10 major retailers along
with several popular brands such as Ralph Lauren and J. Crew to
display their merchandise on its website. However, instead of
selling the goods directly, Amazon will provide inbound links to
the retailers' websites. In return, the online retail major will
receive a certain fee for sending customers to the retailers'
Amazon is making extensive efforts to tap this significant
opportunity arising from the growing craze for online as well as
mobile shopping. Online retail sales improved 10.3% on a
year-over-year basis in the fourth quarter of 2013, according to
) latest Digital Analytics report. The report tracks
approximately 800 e-Commerce websites in the United States.
The strategic move on Amazon's part will expand its product
range increasing the inventory. Additionally, the tie-up will
help the company gather valuable consumer data to enable it to
price its products more competitively.
The retailers will also gain increased exposure for their
products. Their presence on Amazon would potentially give a boost
to their sales but the product presentation on the site will not
be under their control.
Additionally, Amazon plans to launch a television set-top box
(STB) by March this year which will stream video content. The STB
will not only compete directly with
's (AAPL) Apple TV but also with similar products from Roku Inc.
and Boxee Inc., as well as gaming consoles from
) that offer video programming.
We believe that new offerings on Amazon's site will attract
new customers, going forward.The company's continuous efforts to
make more money, despite significant competition from
(GOOG) and other online retailers will be something to watch out
for in the near term.
However, Amazon's continuing investments in fulfillment
centers will hurt profitability, going forward.
Currently, Amazon has a Zacks Rank #4 (Sell).
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