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.
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