E-Commerce Holding Strong - Amazon

amazon earningsDuring the past year, I have repeatedly stated my opinion of the big paradigm shift that will most likely take place during this recession in regards to online shopping. For the younger generation, buying your flat screen TV online could be as easy as clicking the mouse for you. However, this has not been the case for the elders of our society. They still want to touch and feel the product before making the ultimate decision to buy it. They want to bargain a bit with the sales clerk and get them to throw in some bonus accessories. Many of them also love the golden seal of that "warranty" that they are given from the store.

Sure, it is a change to purchase something online rather than in a store, but many of the above listed benefits can apply online as well. Throughout this recession, consumers have taken a huge hit in their discretionary income. Thus, they have, for the most part, become bargain hunters. In most cases, there are no better bargains out there than online. I am amazed to see and hear of the amount of elderly people just now beginning to purchase goods online. Sure, you have to have the patience to wait a few days for shipping, but is it worth the wait if you save hundreds of dollars? I believe we are just cracking the shell of this enormously large market we call E-Commerce.

Amazon confirmed my beliefs of a rapid growing market, as they announced very strong earnings for the quarter. More impressively, was their outlook for the next quarter, which far surpassed expectations. In my opinion this is one market, that as the consumer continues to get beat on, could grow stronger.

Shopping online is a win win for both the consumer and the business. The business benefits from low overhead costs by not needing sales reps or the brick and mortar of a building, as well as no monthly rental and utility costs (except for web hosting costs). In return, the consumer benefits from a lower retail price as prices can be significantly lower while still reaching their same margins.

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In time, I see E-commerce only growing stronger. Every year, more and more people are getting online and staying on it longer. As this young generation grows older, I would expect more and more "brick and mortar" shopping to become obsolete. Amazon is one that looks strong for the long haul, even pending deflationary/inflationary pressures that are heading our way. Happy Trading.



    Amazon looks pretty good.

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