Wednesday, October 12, 2016

Amazon's allure

Over a month ago, Amazon stock was purchased here at its lofty price, now loftier.  The stock had been owned here in the late 1990's and sold for a nice gain, or so I thought at the time.  Clearly it was sold far too soon, and the same was done with Chipotle and Regeneron.  Some like Google and Apple for a very long time and Visa, Netflix, Facebook and others over the last seven years, have been buy and hold names. I don't want to look at more names that were sold too soon or those on tears in the the late 90's tech boom that were not sold soon enough, like ATHM.  These decisions back in time were just part of the game.

Back in Amazon now, as it has a franchise that has no limit to its ambitions.  With its leadership role now in cloud computing(how did that happen), its "focus?" on selling almost anything and everything, its Prime package that becomes more and more of a value as its customers use it, including video streaming, and the Echo product with Alexa that can now include music streaming, they are not stepping back.  They are attempting to create an integrated purchase system that is akin to Apple's communications systems and Google's search systems, ubiquitous oligopolies as a result of user choice.

The recent new Amazon experience here is with grocery and consumer product delivery.  It's exceptionally convenient.  Everything from paper towels, to detergent, over the counter medications, bottled water, salad dressing and many common grocery items is available, although they don't come close to having all brands and products, yet.  Prices are as good as can be found, at times much better. Advil was part of a delivery here, and what was chosen looked like the price that had been paid at the local pharmacy. It was, but the container from Amazon had three times more tablets.  Getting the first large box received picked up off of the front stoop was a bit of an effort, but apart from that it was a welcome time-saver and value.

In this social network dominated and sharing economy, it seems that companies move to being oligopolies rapidly, relative to the past.  When a company makes that move, and embeds itself into the habits of consumers, it can obviously be powerful.  Can they keep growing?  That is the question here and Amazon is the bet.  Books are still the biggest purchase item here, showing long term habits are ingrained.  Whether the stock can continue its climb is uncertain of course.  At least the company is beginning to report positive earnings after years of spending every dime for investments.

Now they begin to challenge FedEx and UPS, their vendors and now to become competitors, at least for their own deliveries.

$1200 in a year?  It depends on the overall market remaining stable.

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