A recent article by Reuters shows that Amazon (AMZN) could be taking out more rival companies throughout the United States. The newest industries Amazon appears to be targeting are sporting goods and home furnishings. Since its launch in 1995, Amazon has put pressure on many large retailers including Barnes & Noble (BKS) and Wal-Mart (WMT).
The newest unit from Amazon is going to be in the sporting goods segment. Quidsi, a subsidiary of Amazon, is most famous for owning diapers.com and soap.com, but is actively entering new markets it sees as potential gold mines. On quidsi.com's website two corporate positions for "Merchandising/Category Manager-Sports" and "Merchandising Associate-sports" show that Amazon is serious about entering the sporting goods market.
Current competitors in the industry should be scared or at least worried by this Amazon move. Dick's Sporting Goods (DKS), and Cabela's (CAB) are two large, publicly traded sporting good stores that could see their shares hurt short-term and long-term as well. The new segment is currently under wraps, as Amazon is actively hiring for the new segment, but won't provide details on specific sports or target markets.
Amazon's new casa.com is close to launch. A trip to the website shows the slogan "Everything for your home." The site already boasts of 35,000 products offered and a 365-day full refund policy, which will likely be one of the biggest and best available in the home furnishings segment. All items will be shipped in one to two days to your home.
Competitors in the home furnishing segment, like Bed Bath & Beyond (BBBY) and Williams-Sonoma (WMS) are among those that could be the most hurt by this launch from Amazon. Amazon has pricing power and will not have the heavy overhead of brick-and-mortar stores, so it will be able to cut its margins to lure customers away from competitors.
A look back over time will show that Amazon has taken market share away from many of its competitors, including:
- Gamestop (GME) - Amazon is one of the leaders in the video game industry and has helped to slow the growth of Gamestop, as more people are buying video games online through Amazon. The one plus Gamestop will have for some time is the midnight releases, where customers can go to a physical store and get their copy of the game at midnight.
- Wal-Mart - The leading American retailer has been hurt by Amazon and a movement of consumers buying products online versus in the store. Seeing reviews of products on the website also leads to smarter decisions from consumers versus shopping several options in-store.
- Barnes & Noble - Amazon has hurt Barnes & Noble more than any other company, with the exception perhaps of Borders. Amazon began as an online book seller, and from the beginning has been able to offer more books and products than customers can find in the brick-and-mortar retail stores of Barnes & Noble.
- PetSmart (PETM) - Recently, the launch of wag.com by Amazon has hurt Petsmart, the leading retail pet food store. Shares traded down on the launch and just recently gained back what was lost due to an outstanding quarter. Similarly, the launch of wag.com could spell trouble for PetMed Express (PETS), which sells medicine and supplies for pets through its website.
- Netflix (NFLX) - Netflix has been losing subscribers in the United States in its direct mail business. While the company is trying to expand in Europe, it receives heavy competition there from LoveFilm, a subsidiary of Amazon. The company offers streaming and DVDs through the mail to customers in the United Kingdom, Spain, Germany, France, Italy, Denmark, Sweden, and Norway.
- Toys "R" Us - One of the newest Amazon-owned websites is yoyo.com. This site sells over 20,000 toys direct to consumers through its website.
Amazon shares trade at $192.15 at the time of writing. Sales of the Kindle Fire have been estimated at 6 million, and it appears that the company is firing on all cylinders right now. Shares are a little expensive for my taste right now, so I would wait for a pullback. Dick's Sporting Goods shares are trading close to a 52-week high of $40.79, and I would definitely sell shares or a portion of holdings as the stock will see a decline in price with an entry from Amazon. If I was a shareholder of Dick's or Cabela's, I would be watching shares of Bed Bath & Beyond and Williams-Sonoma to see how they perform against the launch of casa.com.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.