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Amazon (AMZN) Plans to Set Up Third Bookstore in Bay Area


Recently rounds were made that Amazon.com, Inc. AMZN in a bid to strengthen its presence further in the retail market, is mulling over the idea to set up a new bookstore in the Bay Area.

The new book store is expected to be located at 1785 Berkeley's Fourth Street shopping district. The City of Berkeley has decided to lease an 11,175 square feet area at 1785 Fourth Street to Amazon. If the speculation is confirmed, Amazon will be opening its third bookstore in the region.

Coming to the price performance, shares of Amazon have returned 63.7% over a year, outperforming the industry’s rally of 49.2%.

Growing Bookstore Numbers

Amazon’s opening of a number of bookstores over the past few years is an evidence of its strong focus on expanding business.

The latest store will be the largest bookstore of the company in the Bay Area. In the beginning of 2017, Amazon opened its first bookstore at Santana Row, San Jose. During the latter part of the year, the company opened its second store at Walnut Creek’s Broadway Plaza.

Amazon began opening brick-and-mortar stores in late 2015, the first one being in Seattle. The company has now 15 offline stores across the country, while three are in work-in-progress status.

The company’s customer base will grow with the rising number of bookstores, given its trusted brand name. This will help to generate higher revenues.

Strong Efforts Bolster Business

Amazon’s efforts on boosting its physical presence in the retail space is providing it with a competitive edge against the local book stores who are already reeling under competitive pressure related to price and delivery from the company due to its online presence.

Amazon uses information from its own social cataloguing site, Goodreads and Kindle to understand readers’ preferences.

Additionally, in order to make operations customer friendly, books on Amazon contain readers’ reviews and ratings.

These efforts are helping the company to gain traction.

Strengthening Presence in Retail Sector

Amazon’s innovative skills and diversified product portfolio are helping it to reap benefits from the retail sector. The latest move will bolster the company’s position in the book retail market.

Apart from the book business, the company has been taking strong efforts to increase its market share in the grocery sector by improving product offerings and online services. Additionally, Amazon’s acquisition of Whole Foods Market last year keeps the company on a growth trajectory.

The company also offers two-hour delivery from Whole Foods stores to Prime members in four cities — Austin, Dallas, Cincinnati and Virginia Beach. Recently Los Angeles was added to the list.

We believe Amazon’s customer base in the grocery business will continue to improve with the support of its diversified product offering, exciting offers and special discounts.

To Conclude

Amazon is well poised to sustain the momentum in the retail sector with the help of its innovative ideas, strategic acquisitions and partnerships along with robust product portfolio and strong focus on expansion of business worldwide.

Zacks Rank & Other Stocks to Consider

Currently, Amazon sports a Zacks Rank #1 (Strong Buy).

Investors interested in the broader technology sector can consider some other top-ranked stocks like Twitter TWTR, Stamps.com STMP and Micron Technology MU. All the three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Twitter, Stamps.com and Micron Technology is currently pegged at 21.5%, 15% and 10%, respectively.

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