Amazon Continues To Rewrite The Rules Of Retail

| December 6, 2013 | 0 Comments

Of all the movers and shakers in today’s business world, Amazon (AMZN) may have the highest upside potential.  It seems the sky’s the limit with what the giant online retailer can accomplish.

Already the world’s largest online seller of goods, AMZN continues to rewrite the rules and delve into new, groundbreaking strategies. 

For instance, just recently the company agreed to partner with the United States Postal Service to deliver AMZN packages on Sundays.  The deal makes sense for both the USPS and Amazon, and could pave the way for other private businesses to partner with the postal service.

Amazon has determined the key to its future is how fast it can deliver goods to consumers.  Not only is inventory turnover an important metric in the retail sector, but the quicker consumers receive goods, the less likely they are to go to brick and mortar stores to make the purchase.

In fact, by the end of 2013, Amazon will have 96 warehouses.  That’s after the company invested heavily in its distribution infrastructure.  In the third quarter, delivery and distribution costs increased to roughly $2 billion.

Here’s the thing…

Investors don’t seem to care.  They realize Amazon management is investing in the company’s future.  It appears shareholders are buying into CEO Bezos’ belief that capital investments now will yield higher profits in the future.

As such, the inventive management team at AMZN is doing everything possible to speed up delivery times.  Of course, same-day delivery is the holy grail (and necessary for certain products, such as the company’s new grocery business).

That’s one reason Bezos just unveiled his latest delivery method – and it’s something out of a sci-fi movie.  AMZN is working towards using drones to deliver packages.

The drones will carry packages 5 pounds or less in a 10-mile radius of an AMZN warehouse.  It could take less than 30 minutes for the drones to make deliveries.  Not to mention, the “wow” factor on this delivery method is through the roof.

Now, it’s probably four or five years until we’ll see the drones at work.  And, the company has to get FAA approval – which will be a big deal.  However, Bezos truly believes this project is going to come to fruition.

It’s just one more way Amazon continues to change the face of retail sales. 

Buying call LEAPS (long-term options) on AMZN isn’t a bad way to capitalize off the company’s growth and innovation.  Just keep in mind, long-term calls are likely to be expensive.

Yours in Profit,

Gordon Lewis

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Category: Options Trading, Stocks

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also one of the key analysts behind the highly successful Options Trading Wire and Advanced Options Adviser. As a market maker on the floor of the CBOE, Gordon analyzed and traded stocks and options across a broad range of market caps and industries including retail, internet, oil, insurance, and telecom. He often traded thousands of options contracts per month… and it’s fair to say, Gordon’s analyzed and invested in some of the most complex and successful options strategies in the world.

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