I know it’s had a big run-up in the last week, but this is just the beginning. It hasn’t sunk in and become the conventional wisdom yet that Amazon has a lock on online retail. The same kind of thing was true of Apple. Nobody was sure that they had a lock on the online music download business, but then all of a sudden, everyone realized it, and Apple went through the roof, just as I predicted.
Everyone is still expecting Walmart to eat Amazon’s lunch, but it isn’t gonna happen. The Walmart corporate culture is: lots of stuff, low prices. The Amazon corporate culture is: the user experience is all. On the web, the user experience is all. That’s why Apple is winning, and that’s why Amazon is winning. Amazon has now become the front end for many, many stores. They have a credit card that gives you $25 Amazon gift certificates on a regular basis. Web sites all over the place have Amazon links that pay them a small commission whenever anyone buys something after coming from their site. The Amazon site welcomes you and presents you with recommendations that get better and better the more stuff you buy and look at. Walmart isn’t doing any of these things. Walmart isn’t about great user experience. Walmart is about low prices for lots of stuff. And here, now we have a website.
At some point it will dawn on everyone that Amazon has it sewn up. And at some point, Walmart will make a deal with Amazon. When these things happen, Amazon stock will double, at least, from where it is now. Amazon (AMZN) is a long term play. I intend to hold it until everyone in the U.S. has a broadband connection to the internet, and then wait a year after that, before I even think about selling.