Impressing Retailers That Are Encroaching on Amazon.com, Inc. (AMZN)’s Space

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As stated by Wal-Mart’s CEO Michael Duke in the company’s first quarternews release, Wal-Mart’s e-commerce sales grew nearly 30% from the same time the prior year. And, it continues to invest in the growing division. So, while its 2012 online sales were only $7.7 billion compared to Amazon’s $61 billion, Wal-Mart may be poised to compete with the online retailer more directly as its new platform is rolled out across America and then the globe.

Costco is also ramping up its e-commerce platform. According to Chinese news sources, the firm is pursuing potential partners in China so it can open a Chinese e-commerce division. In the first quarter, it increased its online sales by 20%, and the company anticipates further growth in the online sector. Also, 80%-90% of Costco’s online offerings are not sold in stores; therefore, many of the company’s online sales will supplement, not cannibalize, its brick and mortar sales.

Target Corporation (NYSE:TGT) is scurrying to enter the picture, too. In May, Target Corporation (NYSE:TGT) announced that it opened a Technology Innovation Center in Silicon Valley so that it could expand into the mobile application, online search, social media, and e-commerce markets. The office is a hub for Target’s e-commerce initiatives and, though value has not been immediately experienced, executives hope that it will spur the company to grow in an increasingly competitive industry.

Conclusion

Over the long term, companies with sustainable advantages, large economies of scale, and healthy cash balances generate value for investors. In addition, though, both Wal-Mart and Costco continue to innovate and improve their business operations and processes. Moving forward, Amazon.com, Inc. (NASDAQ:AMZN) must beware of the large low-cost giants.

The article 2 Impressing Retailers That Are Encroaching on Amazon’s Space originally appeared on Fool.com and is written by Brendan Marasco.

Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Costco Wholesale. The Motley Fool owns shares of Amazon.com and Costco Wholesale. Brendan 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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