Still In Love With Amazon.com Review

Online.barrons.com: 02/02/2013
IM4.05 - Explain why some companies are much more capable of achieving international business success than are others.

Summary

Shares of the e-commerce company, Amazon.com, are unusual because they rise when the company makes money and yet somehow they are able to rise even more without the company making any more. Late January, Amazon announced that it missed revenue and profit estimates that were expected for the fourth quarter of 2012. It also reported that shares rose by 10% in after-hours trading but then fell 4% to $265 by the end of the month. It remains strong though, with its shares up 48% in the past year. Some analysts say that the market ignores Amazon’s earnings trajectory because sales growth is the main goal for the e-commerce giant, but the revenue growth recorded in the last quarter of 2012 was up 22% while the percentage of the previous quarter was 35%. The revenue growth for the whole year was just 27%; not quite as significant as 2011’s 41%. Amazon’s ability to reach out for more third-party sellers shows that it is capable of one day, becoming a type of infrastructure through which e-commerce transactions will flow. Some hypothesize that eventually it might not sell goods, but will facilitate transactions between buyers and sellers, while collecting tolls. Stifel Nicolaus’s Jordan Rohan, who rates the shares Buy estimated that the total value of Amazon’s goods and services sold in the last quarter was close to $40 billion. As long as it continues to attract more buyers and sellers, the stock price is almost guaranteed to continue rising.

Connection

Amazon is clearly one of the top online retailers in the world today. If it has sold $40 billion worth of goods and services in one year, clearly it is doing everything right and has achieved international business success for at least that year alone. Businesses that operate globally or online and ship to many different countries around the globe have a stronger advantage when it comes to operating a successful business. For instance, McDonald’s is a global business that is recognized internationally with its golden arches and has over 33,000 restaurants in 118 different countries. Amazon on the other hand, may not have customers in that many different countries because many places around the world are still developing countries where not everyone has access to a computer or smartphone where they can order purchases online. But the site definitely still has a wide variety of different customers, like a global business, who are interested in buying anything from books to groceries to athletic equipment. Amazon has a product for almost anybody and what’s convenient about it is that for many people living in the developed countries, the product is literally delivered to their doorstep. They can order at any time of the day without worrying about the store closing and a lot of these products are sold at reasonable prices. By offering quality customer service online, an extremely diverse selection of products, and prices that are often better than certain department stores, Amazon and other ‘e-commerce giants’ are much more capable of achieving international business success.

Notice how amazon's logo has an arrow from 'a' to 'z'? It's symbolic of the wide variety of products offered.

Logo from Amazon.com