The world's largest Internet retailer
) announced that it is planning to sell wines online.
The company started its wine business way back in 1999 with a
45% stake in Wineshopper.com, but closed down 10 years later as the
business did not perform to expectations. It is now re-starting in
a much smaller way, selling wines directly to consumers in Napa
Amazon is clearly driven by this very big market. It is true
that growth prospects may not be so exciting (a ResearchAndMarket
study estimates a 3% CAGR to 2013). However, given the size of the
market ($33.5 billion by 2013), Amazon would see big gains if it is
able to convert even a fraction of these sales to its online model.
Amazon has room for expansion in this unique segment. Wine
lovers are present at every nook and corner of the world. So its
current selection of Chardonnay, Pinot Grigio, Pinot Noir,
Champagne and other exquisite wines could see more takers.
Amazon is one of the leading players in the extremely
fast-growing retail ecommerce market that includes players like
) and others. While the strong growth prospects are making the
market more competitive by the day, Amazon continues to maintain
and even grow its share on the back of its consistent and reliable
service. Amazon's scale of offerings, its broad reach and platform
approach are the keys to its success.
Amazon's second quarter results were more or less within
expectations. Reported revenue of $12.83 billion was down 2.7%
sequentially and up 29.5% from the year-ago quarter. This was
better than the guidance for the quarter of $11.9-13.3 billion
(down 4.4% sequentially, or up 27.1% year over year at the
mid-point) and in line with consensus expectations. Year-over-year
revenue growth was 32%, excluding an unfavorable currency
Currently, Amazon has a Zacks #3 Rank, which implies a Hold
rating in the near term.
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