Amazon (NASDAQ:AMZN), the e-commerce giant based out of Seattle, WA, is best known as the world’s largest retailer with operations across several countries. Apart from electronics, general merchandise, books, music and DVDs, the company is also a major provider of cloud computing services. Braving intense competition, Amazon has shown outstanding growth since its inception. The growth story is backed by the innovative solutions it provides to its customers. Here, we discuss some of these services and offerings.
Public Lockers for Books, DVDs, Electronics and General Merchandize
In the face of increasing competition from online and bricks & mortar retailers, Amazon’s growth in the U.S. market has slowed. To combat this slowdown, the company is experimenting with new delivery models, the most recent being public lockers at select locations. The concept is for the delivery to happen at this locker instead of a street address. When the package arrives, an email notification lets the user know where to pick it up along with a code to unlock the locker. With the lockers strategically placed at convenience stores, the customers can pick up their packages 24 hours a day instead of worrying about being at home to sign for the delivery of the package.
If this new offering succeeds, Amazon can convert a substantial portion of non-users. Additionally, it can save on additional costs associated with delivering packages at doorstep and advertise through branded lockers.
A New Kindle Device May Be On Its Way
A new Kindle device may soon be released if rumors are to be believed. The biggest hint in support of this speculation is the availability of existing devices at heavily discounted prices from Amazon. Trade pundits believe that this is a stock clearing exercise. A new advanced device will let the company better compete with other tablets such as Google (NASDAQ:GOOG) Nexus, Apple iPad, etc.
A good product coupled with a well-timed release could help Amazon corner some more market share from the market leader Apple. The device which is primarily used as an e-reader also brings in additional sales for the company in the form of sales of e-books and supported apps.
Cloud & Other Web Services
The company is making dedicated efforts to increase its user base for cloud-based services. It claims that it already has millions of users. The biggest push on this front has come in the form of support for an increasing number of devices for the Cloud Player. The recently launched service has lots of new audio features like Scan and Match technology and licensing deals with a number of labels. It allows users to store and stream music over a wide variety of host devices from the Kindle range, Android devices, Macs and personal computers to even the rival iOS supported devices. This enhanced ubiquity gives Amazon the ability to snatch further users from rival services like Apple (NASDAQ:AAPL) iTunes.
Another positive for Amazon’s Web Services comes from the NASA’s Jet Propulsion Laboratory. The latter is using the web service to capture and store images and metadata collected from the Mars Exploration Rover and Mars Science Laboratory missions. The key points that made NASA choose Amazon over its own data centers are cost effectiveness and the ease with which the data can be made public. You can read more about the project here.
The endorsement from a high profile customer as NASA is expected to boost Amazon’s institutional customer base for this service. We expect revenues from cloud and web services to jump from $2 billion currently to almost $7 billion by end of our forecast period.
We currently have a $222 Trefis price estimate for Amazon, which stands close to its market price.