Amazon's total domination of retail is well reported by now, so it's worth considering how the company does it.
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Amazon's domination of retail comes down to 5 simple areas (AMZN)
Amazon's stock price has soared as it takes on traditional retailers, but the question of whether it will continue comes down to one acronym.
One Montana brokerage firm, DA Davidson, says the answer is "SIMPL."
"To exploit the retail market opportunity in the future, retailers will need to excel in the following areas: Social Networking, International Expansion, Mobile, Payments and Logistics," Tom Forte, an analyst at DA Davidson, said in a recent note to clients.
Noise about Amazon's take over of traditional retailers hit a peak after Amazon announced its takeover of Whole Foods for $13.7 billion. By the time the deal was made official, brick and mortar retailers and grocery store chains had lost billions of dollars of stock market value. Some companies' entire futures were held in the balance, as Blue Apron's disappointing IPO demonstrated.
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Many companies aren't sitting by idly. Google and Walmart recently teamed up to take on Amazon's dominant position in e-commerce. Some retailers, like Nike, have given up on previous resistance to selling their products on Amazon's platform.
Forte's SIMPL acronym acts as a sort of measure for how well these companies are doing to attract customers in the rapidly-changing retail sector. He breaks it down like this:
- Social media
- International expansion
- Mobile
- Payment Methods
- Logistics
Amazon certainly isn't perfect in all the areas it needs to dominate, but it is doing better than most, according to Forte. He rates the company a buy and has a price target of $1,300.
Amazon has grown 29.70% so far this year.
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