Whole Foods Market, Inc. (WFM), Amazon.com, Inc. (AMZN): Three Big Picture Themes for a Market Sell Off

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The mCommerce boom

The retail landscape is rapidly changing due to growth in smartphone and tablet ownership. This development has led to an explosion in mobile commerce. Last year, mobile sales increased 31% making it the fastest growing segment in retail.

According to estimates provided by eMarketer, mobile accounted for less than 7% of total U.S. eCommerce sales in 2011. By 2016, mobile commerce will account for nearly 25% of online retail.

Amazon.com, Inc. (NASDAQ:AMZN) is the top name poised to benefit from this trend.

Amazon.com, Inc. (NASDAQ:AMZN) was one of the pioneers in the mobile space giving the company the most time to develop and refine its offerings. Amazon has a great portfolio of mobile apps that are easy to use and integrated across all of its platforms (mobile, desktop, tablet, etc). Competitors are playing catch up.

These efforts are paying off. The company owned 10% of U.S mobile retail sales in 2012. According to a Citigroup Inc (NYSE:C) research report, Amazon.com, Inc. (NASDAQ:AMZN) generates $3-$5 billion in mobile sales accounting for nearly 10% of the company’s total revenues. This could grow substantially as the category matures.

Yet Amazon.com, Inc. (NASDAQ:AMZN)’s critics continue to complain about thin operating margins and scant returns. They want to see the company cut back on its expansion plans to focus on short-term profitability.

But CEO Jeff Bezos has his eye on a bigger prize: complete retail domination. And he has the patience and financial resources to do it.
Expensive investments today will give Amazon.com, Inc. (NASDAQ:AMZN) the size and scale necessary to make its business model profitable in the future.

Bezos isn’t managing Amazon.com, Inc. (NASDAQ:AMZN) to please shareholders next quarter. Profits will follow once the company ends its expensive investment program. As earnings start to become more visible, it will be a big catalyst for a higher share price.

Foolish bottom line

The big benefit to sticking with secular themes: they provide a tailwind that allow companies to grow earnings and expand margins through erratic economic cycles.

The trends listed above won’t disappear when the next European debt auction sours or if Congress gets tangled in another round of budget gridlock. As an investor, that gives me the courage to hold through the occasional market panic.

The article 3 Big Picture Themes for a Market Sell Off originally appeared on Fool.com and is written by Robert Baillieul.

Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Whole Foods Market. The Motley Fool owns shares of Amazon.com and Whole Foods Market. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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