Is Amazon (AMZN) Getting Too Good at... Screwing Itself?
Tweet
Share
E-mail
Get Alerts AMZN Hot Sheet
Join SI Premium – FREE
Amazon.com (Nasdaq: AMZN) may need to change it advertising strategy if it plans to complete with Netflix more wholly.
By that, we mean the promotion tied to signing up for Amazon Prime.
Just about anyone capable enough an with Internet access has ordered something from Amazon.com, from a gift to someone else or that hard-to-find trinket you've been searching the globe to find. Basically, Amazon.com is an amazing e-commerce experience.
Knowing that keeping prices low isn't good for margins or growth (over the long run), Amazon started offering a service similar to Netflix (Nasdaq: NFLX): streaming video. Amazon.com was hoping to bank on customers being familiar enough with the shopping experience to move into content consumption via the same website. It seemed a little far-fetched, but it worked. Amazon now has Amazon Prime which, in addition to video and book rentals, offers-up free two-day shipping on every item ordered and guaranteed by Amazon.
That's where the problem lies. If you've ordered something from Amazon and live anywhere near a major metropolis, like most people, you start to notice something. Amazon has been so good at expanding logistics that shipments from an Amazon warehouse take only about two days anyway (not including weekends).
(By living around a major city, we're talking about a 75 mile to 100 mile radius. Something within an hour or two drive)
So, the question then becomes is Amazon shooting itself in the foot by getting better at logistics/warehousing? If it is, should it simply bite the bullet and offer a month-by-month Amazon Prime service? Worst case, including administration costs, it might still come in before Netflix, Hulu, and others, while still retaining customers as a key shopping hub. (The current rate is about $80 per year, or $6.67 per month. That's about $1.30 less than what Netflix is charging.)
Admittedly, if you buy more than one item per month, the savings immediately become apparent. It may not be so for those that use Amazon Instant Video simply because it came on their entertainment system Blu-ray player, or something else.
What else could Amazon offer? More cloud storage for your music and videos? One-day shipping? (Editor's Note: Amazon, please do that.) Bonus points for free rentals or discounts? What if you don't order an Amazon-fulfilled item? Amazon had better come up with something fast, because it might need a little more incentive for some to make an outlay of $80 instead of $7.99 per month.
No matter how much sense it makes. Shares are down about 0.3 percent Thursday.
By that, we mean the promotion tied to signing up for Amazon Prime.
Just about anyone capable enough an with Internet access has ordered something from Amazon.com, from a gift to someone else or that hard-to-find trinket you've been searching the globe to find. Basically, Amazon.com is an amazing e-commerce experience.
Knowing that keeping prices low isn't good for margins or growth (over the long run), Amazon started offering a service similar to Netflix (Nasdaq: NFLX): streaming video. Amazon.com was hoping to bank on customers being familiar enough with the shopping experience to move into content consumption via the same website. It seemed a little far-fetched, but it worked. Amazon now has Amazon Prime which, in addition to video and book rentals, offers-up free two-day shipping on every item ordered and guaranteed by Amazon.
That's where the problem lies. If you've ordered something from Amazon and live anywhere near a major metropolis, like most people, you start to notice something. Amazon has been so good at expanding logistics that shipments from an Amazon warehouse take only about two days anyway (not including weekends).
(By living around a major city, we're talking about a 75 mile to 100 mile radius. Something within an hour or two drive)
So, the question then becomes is Amazon shooting itself in the foot by getting better at logistics/warehousing? If it is, should it simply bite the bullet and offer a month-by-month Amazon Prime service? Worst case, including administration costs, it might still come in before Netflix, Hulu, and others, while still retaining customers as a key shopping hub. (The current rate is about $80 per year, or $6.67 per month. That's about $1.30 less than what Netflix is charging.)
Admittedly, if you buy more than one item per month, the savings immediately become apparent. It may not be so for those that use Amazon Instant Video simply because it came on their entertainment system Blu-ray player, or something else.
What else could Amazon offer? More cloud storage for your music and videos? One-day shipping? (Editor's Note: Amazon, please do that.) Bonus points for free rentals or discounts? What if you don't order an Amazon-fulfilled item? Amazon had better come up with something fast, because it might need a little more incentive for some to make an outlay of $80 instead of $7.99 per month.
No matter how much sense it makes. Shares are down about 0.3 percent Thursday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
- Midday movers: Netflix, Super Micro fall; Paramount Global gains
- Walt Disney (DIS) PT Raised to $141 at Wells Fargo
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
HuluSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
