Amazon Has Great Holiday Sales, What About Competitors
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Amazon (NASDAQ: AMZN) had a great holiday season according to the reports the company released the day after Christmas. 26.5 million items were sold during the run-up to the holiday season, an Amazon record.
Most Popular Amazon Item
Did you know what Amazon’s most popular item of the holiday season was? The Kindle Fire HD; it was the most gifted and the most wished for product on the retailer’s website. All of those Kindle Fire customers ended up buying lots of apps from Amazon's own App Store as sales of apps were up 250% for the company year-over year.
Amazon’s Doing Well, What About Others
There’s no doubt that Amazon is growing revenue. For some investors, it is this phenomenal revenue growth that justifies their outrageous P/E. Of course, there are other retailers and manufacturers out there that Amazon is aggressively poaching market share. These companies haven’t released any holiday season stats like Amazon, but we can still take a look at how they are doing anyway.
GameStop (NYSE: GME) is the first company that comes to my mind. I have written about the failings of GameStop in the past, and even though they also have a retail website, the products cost more than at Amazon’s. If GameStop doesn’t adapt and push their used game business online, then I don’t think they’ll have a punchers chance against Amazon in the video game retailing space.
Barnes and Noble (NYSE: BKS) is in direct competition with Amazon’s book sales and their Kindle platform via their Nook tablet. I thought the Kindle could outperform the Nook and provide Amazon with a victory, but as I was writing this article breaking news was reported about Pearson taking a stake in the Nook.
So, Pearson is taking this position, could it mean that the Nook will eventually make a big push at taking away Kindle’s market share? I think it’s still too early to tell. That's right folks, this 5+ year war between the Nook and Kindle will continue on for years to come.
Best Buy (NYSE: BBY) competes with Amazon on the electronic front and has sometimes been considered an “Amazon Showroom.” Will Best Buy be able to defeat Amazon, or even stay in the fight? It’s another time will tell scenario. The founder of Best Buy is looking to take the company private. If he succeeds, the company may do OK, but if he fails I think it will only be a matter of time before Best Buy collapses.
A Growing Company That Will Last
Target (NYSE: TGT) is a growing retail giant that can withstand competition against Amazon, isn’t extortionately priced, pays a dividend, and is worth your investment dollars.
Target will have no doubt had a great holiday season; the company sells clothing, food, electronics, toys and more, all under one roof. They’re not as big as Wal-Mart but they are certainly growing and have the room to grow.
What to do?
I would invest in Target, especially over the long-term. The company will always have foot traffic and I think that the foot traffic at Target will continue to grow, especially as new stores are opened.
If you think that Amazon can continue to grow at incredible rates and actually turn a decent profit on that growth then Amazon may be for you.
I would not touch GameStop, Best Buy, or Barnes and Noble at this stage, I think there are better investments out there.
Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and GameStop. Motley Fool newsletter services recommend Amazon.com and GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!