Why It’s Prime Time for Amazon.com, Inc. (AMZN) Stock

Amazon.com, Inc. (NASDAQ:AMZN) stock could finally get the lift it deserves if the company’s expanding grocery business is a hit. However, Amazon.com, Inc. (NASDAQ:AMZN) will need more than fresh produce to grab a meaningful share of the $568 billion U.S. grocery market. Fortunately for Amazon shareholders, where success in groceries is concerned, the e-tailer isn’t leaving a lot to chance.

Amazon.com, Inc. (NASDAQ:AMZN)

That’s where Amazon Prime Fresh comes into the mix. In an apparent bid to replicate the success of its original Prime shipping program, Amazon recently announced a new version of the service called: Prime Fresh. As a regular Prime member, I get unlimited two-day shipping from Amazon.com, Inc. (NASDAQ:AMZN) for just such $79 a year. However, Prime Fresh now offers customers unlimited same-day and next-day shipping on more than 500,000 products and groceries for $299 per year.

So what?
This new offering is exciting for a few reasons. First, Amazon already has the logistics and infrastructure in place to easily pull off same-day delivery, whereas grocery retailers like Whole Foods Market, Inc. (NASDAQ:WFM) lack the resources necessary to offer grocery delivery at Amazon’s scale. This could be a problem for Whole Foods Market, Inc. (NASDAQ:WFM) down the road if Amazon.com, Inc. (NASDAQ:AMZN) Fresh expands nationally, particularly since Amazon Fresh offers a wide selection of organic and locally sourced produce.

Amazon’s Prime Fresh could also be a catalyst for the stock if enough customers opt into the program. Consider this, “Prime customers spend more than twice as much annually on Amazon.com, Inc. (NASDAQ:AMZN) than non-Prime customers,” according  to Wired.

This should play out even better for Amazon, thanks to its new annual membership fee. Think about it: Customers who pay the $299 for Prime Fresh are going to make sure they get their money’s worth in same-day and next-day shipping — and how do they do that? By ordering more frequently from Amazon.com. Looking ahead, I suspect Amazon.com, Inc. (NASDAQ:AMZN)’s Prime services will play a key role in the future success of Amazon stock.

The article Why It’s Prime Time for Amazon Stock originally appeared on Fool.com and is written by Tamara Rutter.

Fool contributor Tamara Rutter owns shares of Amazon.com. The Motley Fool recommends and owns shares of Amazon.com and Whole Foods Market (NASDAQ:WFM).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!