Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Amazon.com, Inc. (AMZN) Is Afraid Of This. Should You Be Too?

Despite Best Buy Co., Inc. (NYSE:BBY)’s and eBay Inc (NASDAQ:EBAY)’s shortcomings, both have been working hard to take away market share from Amazon. For instance, eBay announced in March that they were reducing costs and introducing a new fee structure to incentive sellers on eBay not to switch over to Amazon’s marketplace. If eBay made a more concerted push to take away Amazon’s marketplace sellers, then it could hurt Amazon’s dominance in this sector. The biggest obstacle for eBay with this is that a third-party seller on Amazon is viewed as being more credible than on eBay. On Amazon you are more likely to be viewed as a legitimate business, while sellers on eBay Inc (NASDAQ:EBAY) may seem like people selling out of their garage.

This brings us to Best Buy. Best Buy Co., Inc. (NYSE:BBY) seems to think that it is not going to go the way of Circuit City, but the future doesn’t look great for the company. Every single brick and mortar retailer wants to expand its online sales, but getting there is the problem. While Amazon will have to succumb to state sales tax in the next ten years, I don’t believe this will give any retailers a chance to take market share away from Amazon. Amazon is already investing heavily in improving their delivery system and is working hard, racing against Wal-Mart to see who can establish same day delivery first. Best Buy doesn’t bring a lot to the table. Instead it is trying to create smaller stores that focus on wireless devices and the store within a store model. Amazon.com, Inc. (NASDAQ:AMZN) need not be worried by this, as RadioShack Corporation (NYSE:RSH) has already tried that model, and it hasn’t been working out great for them. Sure the stock is up a little bit, but would we really need two Radio Shacks in the world when there is barely room for one?

Amazon commands such a high stock price because analysts and investors do not see much competition for it. But as we have seen before, because a company has a near monopoly on what it does, in this case getting you essentially whatever you want cheaply and free two-day shipping if you sign up for Amazon.com, Inc. (NASDAQ:AMZN) Prime, internals and a changing regulatory environment can harm a company’s stock price as much as new competition can.

The article Amazon Is Worried-Should Investors Be As Well? originally appeared on Fool.com and is written by Christopher Drose.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.