Yesterday, Amazon’s (NASDAQ: AMZN) shares hit a record high of $251.38, rising 2.10% in response to the reveal of its new Kindle tablet. Positive vibes seem to be continuing; in today’s pre-market, Amazon was quoted to rise 1% and is being actively watched by many. Although this wave of interest in Amazon is accredited to the new Kindle, it should be noted that Amazon has been investing recently in numerous new features to help it grab control of multiple markets, or else distinguish critical edges against its opponents.
Amazon also recently made news with its new upgrades to the Amazon Prime service. For those unfamiliar with Prime, it is an premium membership to its Internet marketplace that costs an annual fee of $80 in exchange for shipping discounts, movie streaming, and discounts on items from the Kindle library.
The upgrades to the service is a knife pointed not only at the throats of retailers like Target (NYSE: TGT) and Best Buy (BYSE: BBY), but also Netflix (NASDAQ: NFLX), which is struggling to gain traction since its disastrous service split fiasco last year. Netflix would be right to worry; a major aspect of Amazon's Prime upgrade includes a partnership with Viacom’s(NASDAQ: VIA) video-on-demand service, Epix, which will more than double Amazon's streaming service and give subscribers access to more recent blockbusters. The Epix partnership could be a turning point for the service, which failed to pick up many members in its introduction a few years, but is starting to gain momentum now.
Prime is a major threat to retailers of all brands, but Amazon is instilling fear in the minds of sporting good stores in particular with its new website, Afterschool.com. Although not as loudly announced as its other services, the upcoming launch of Afterschool.com is a strategic move by Amazon to increase its strength in the field of children’s sporting goods and extracurricular activities. The website is reported to launch with 50,000 available products, and the ability to browse categories by age, sport, or activity. Similar to Prime, Afterschool.com will offer shipping discounts, promise one to two day delivery, and offer free shipping for every order above $49.
Of course, we haven’t even gotten to the new Kindle Fire yet, Amazon’s major strike against Apple (NASDAQ: AAPL).
The new tablet wowed investors yesterday with its larger screen, increased memory, and dual Wi-Fi channels for faster transfers. The device seems to be marketed almost specifically to compete with Apple's iPad, offering similar (if not better) specs on even its cheaper models, with prices starting at $159. If that weren’t enough, the new Kindle Fire also features new abilities such as X-Ray, which can pull up useful information on an article or video via connections with databases similar to Amazon’s IMDB. Of course, Amazon is hoping that an increase in Kindle sales will in turn bolster Prime membership, so Kindle users can take advantage of the Kindle Owners' Lending Library, which lets owners read thousands of books for free.
Investors should also be aware that Amazon is planning on opening new offices in the UK, hiring 2,000 new workers as it aims to expand its presence in the country. The company plans on opening 18 new fulfillment centers this year to help speed deliveries and help siphon consumers off of physical marketplaces. The investment could hurt Amazon’s third-quarter earnings by nearly $350 million, but founder Jeff Bezos see it as a necessary cost for what the company will gain.
In the end, Amazon’s rivals have a lot to be afraid of in the coming months, as the online sales giant seems poised to deal heavy strikes to their businesses.
There’s even some speculation that Amazon may enter the highly competitive mobile phone market soon, though its press release yesterday made no mention of the idea. Right now, researching and developing a smartphone would present a high-level of risk for Amazon. Yet, if the strategies the company has implemented recently bear big enough fruit, perhaps we’ll be looking at a Kindle phone before too long.
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