Tag: Amazon

Retailers across America have been closing stores in droves this year amid years of declines in sales and customer traffic and an increasing threat from Amazon.

So far in 2017, retailers have shut down more than 6,300 stores. UBS says the sneaker retailers Foot Locker and Finish Line could be the next to start closing stores.

UBS’ findings come following Friday’s dismal second-quarter results from Foot Locker that caused shares to plummet by nearly 30%. The company announced earnings of $0.39 a share on revenue of $1.7 billion, both of which were shy of Wall Street expectations. Additionally, same-store sales sank 6% versus a year ago. Foot Locker shares have plunged 57% over the past three months.

On Foot Locker’s quarterly conference call, chairman and CEO Richard Johnson said he wasn’t worried about Amazon. Here’s Johnson (emphasis ours):

“For our part, we will continue to invest in creating compelling experiences for our customers. At the premium end of the market, most of our customers don’t want to just buy a specific product they see on a screen. They want that product to have a connection to an experience they find meaningful and want to participate in. That experience could be a special event in a store, being notified of or discovering a video on our website or YouTube channel of an athlete or celebrity wearing or discussing the latest product, an interaction with their friends while touching and feeling the product, or simply a conversation about sneakers with one of our stripers or other store associates. For that reason, we do not believe our vendors selling product directly on Amazon is an imminent threat. There is no indication that any of our vendors intend to sell premium athletic product, $100-plus sneakers that we offer, directly via that sort of distribution channel.”

But in a note sent to clients on Monday, UBS analyst Michael Binetti downgraded both Foot Locker and Finish Line and said it’s “almost certain” that the sneaker retailers would lose market share to Amazon. He lays out three reasons he thinks things are about to get a lot tougher for the industry.

First, Binetti sees Nike stepping up its efforts to push sales directly to the consumer. That is especially worrying for Finish Line, which, according to Nike’s October 25 analyst day, sees 68% of its sales come from Nike. Binetti adds, “For Foot Locker in particular, while many of its stores are among the most compelling retail experiences in our US specialty coverage group, we think the company will have to significantly accelerate closure of its lower tier stores to properly absorb market share shifts to the brands own DTC businesses (and to Amazon).”

But the sneaker retailers’ problems don’t stop there. It appears consumers are now choosing to buy their Nikes on Amazon versus going into brick-and-mortar stores like Foot Locker and Finish Line. “UBS Evidence Lab survey shows that in ’17 for the 1st time, more consumers prefer to buy Nike on AMZN vs at FL,” Binetti wrote.

There was a “significant YOY increase in the percent of consumers who prefer to buy Nike product ‘on the brand’s own website,'” Binetti notes. “The combination of an accelerating shift of purchase to both Amazon and the brands’ own website — and the subsequent reduction in purchase intent through athletic specialty retailers like Foot Locker — makes it hard to see the path back to accelerating market share gains for Foot Locker.”

Finally, both Foot Locker and Finish Line have a large presence in malls that have lost the anchors Macy’s and J.C. Penney.
Specifically, Binetti says, “We think FINL is at particular risk (more so than FL anyway) of further deterioration in sales & traffic trends in its stores due to high exposure to lower-tier locations.”

As a result, UBS downgraded Foot Locker from “buy” to “neutral” and Finish Line from “neutral” to “sell.”

By Jonathan Garber for www.businessinsider.com

The Federal Trade Commission is reportedly looking into whether Amazon’s discounts are as good as they seem.

As part of the FTC’s review of Amazon’sagreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, Reuters reports, citing a source close to the probe.

The probe is based on a complaint from the advocacy group Consumer Watchdog, Reuters said. The FTC had no comment, saying as a rule it doesn’t confirm the existence of investigations. Consumer Watchdog earlier this month published a report claiming the online retailer “routinely uses inflated and fictitious previous prices to give consumers the misleading impression they’re getting a bargain.”

Amazon refuted the group’s pricing report.

“The study issued by Consumer Watchdog is deeply flawed, based on incomplete data and improper assumptions,” it said in a statement. “The conclusions the Consumer Watchdog group reached are flat out wrong. We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.”

Consumer Watchdog, which analyzed 1,000 items sold on Amazon, said the retailer often employs “previous” prices, which it alleges are designed to give the appearance of big discounts. Consumer Watchdog said the “previous” prices appear to replace Amazon’s “list price,” which earlier this year came under fire for allegedly failing to reflect the actual market price of an item.

“Amazon displayed reference prices on 46 percent of the products surveyed—a sharp increase from a similar sample taken just months before,” Consumer Watchdog said in its report. “They now employ several different kinds of reference price, including “was” prices, “sale” prices, or simply prices with a line through them (“strikethrough prices”).”

The report also alleges Amazon boosted the reference prices to about 70 percent higher than the historical price of the item.

In one example, Amazon said the before-sale price on a pack of LED light bulbs was almost $100, but offered the pack on sale for $14.99, showing that customers would receive an $85 savings. However, Consumer Watchdog said the site hadn’t charged more than $14.99 for the lightbulbs in the previous 90 days.

“Amazon appears to be increasing its use of reference prices on its site since last year, when it quietly eliminated many list prices,” the report said. “However, the result is the same: Amazon’s customers are being deceived into thinking they are getting a bargain, when in most cases they are not.”

Consumer Watchdog said it believes the Whole Foods acquisition should be blocked unless Amazon changes its pricing strategies.

By Aimee Picchi for CBS News

Amazon has sent shockwaves through the food retailing business with its near $14-billion acquisition of natural and organic food chain Whole Foods.

The move has dominated the financial news over the past three days and has been called a game-changer for the food retailing industry, but could there be wider ramifications for the business supplies industry? We suggest a few things to think about…

Whole Foods locations could be used as collection points for Amazon online sales, providing customers with more delivery options.

Whole Foods stores could act as local distribution hubs for fast delivery, two hours or even less, and give Amazon a stronger last-mile delivery presence.

Amazon’s move could have a disruptive effect on the wider food retailing industry. There is already speculation about the need for accelerated consolidation in the mass and grocery sector, and if that happened that would affect vendors that sell into these retailers.

Amazon has been testing more consumer-friendly retail concepts, such as its Amazon Go initiative where customers just pick items off shelves without the need to go through a checkout. Acquiring Whole Foods will give it a wider test platform and could lead to faster adoption of some of these shopping innovations as well as speeding up digital transformation in the retail sector in general.

We have previously downplayed the idea of Amazon acquiring retail locations in the business supplies channel because there was no indication that it would make a significant move into the retail space. That has now changed, and the Whole Foods deal validates Amazon’s belief in an omnichannel experience that combines the digital and physical worlds.

Could this mean that Amazon now looks to acquire retailers in other business segments, such as office supplies, and that Staples or Office Depot’s stores could be on the Amazon radar? Possibly, especially if Amazon is not happy with the way that Amazon Business is growing; it hasn’t updated its customer and sales figures on Amazon Business in the US since April 2016. Is that because the growth rate has slowed and it’s not getting the traction it thought it would after Amazon Business’ initial success?

The Whole Foods acquisition is reportedly being driven by difficulties Amazon was having in growing its Amazon Fresh grocery delivery business. If Amazon Business is stalling or not growing fast enough, then why wouldn’t Amazon look at buying growth? We now know that this strategy is part of Amazon’s playbook.

By Andy Braithwaite for OPI.net

 

When you need to buy a new kitchen gadget, a designer lipstick, a branded razor, a calendar and that vital cable for your television — what’s the one easy place you can turn to?

That’s right, there isn’t one in Australia. You’re facing hours going shop-to-shop, picking up second-rate products from a local mall or ordering from various websites with delivery fees on each item and mixed rules on returns.
Amazon is the game-changer our retail landscape needs, one that transformed shopping in the UK and US years ago. Despite the hand-wringing from the retail sector that has dominated reporting on the online giant, this is mostly good news for the consumer.
You will be able to buy what you want, when you want it. It will typically be affordable. Existing brands will have to work harder to compete. It will be the arrival of Uber, or Aldi, all over again.

I lived in the UK more than four years ago, and buying books, travel accessories and homeware couldn’t have been easier. Every Christmas now, I log on to Amazon and select the perfect toiletries, chocolates, booze, games, DVDs, hiking gear and toys that I want for all of my relatives, adding wrapping and a message where needed. It’s the work of minutes.
In the four years I’ve been in Australia, waiting for Amazon, the company has grown enormously, and it’s in fashion that investment bank Morgan Stanley now sees the biggest threat.

Its report “The Amazon Effect in Australia” says $800-million will be wiped from the earnings of chains including JB Hi-Fi and Harvey Norman, but the single biggest impact will be on Wesfarmers. The nation’s largest retailer, which owns Target and Kmart, could lose more than $428 million in earnings by 2026.
The report said department stores would be the sector worst hit, as Amazon generates up to $12 billion in sales by 2026.

Online retailer Catch Group this week announced it is having a makeover to ensure it becomes number two in Australia after Amazon, rebranding Catch of the Day as Catch.com.au and turning it into a marketplace.
Amazon Fresh will take on the grocery sector, and it is aggressively building its Amazon Prime video membership service, making inroads into streaming and refusing to stock Apple products in favour of its Fire TV sticks. Amazon entered the Artificial Intelligence field in 2014 with its Alexa speaker. This week it emerged that its shares (and those of Google) have just reached $US1000, putting them in an elite club of mega-companies.

In December, it opened the first Amazon Go store at its Seattle headquarters, a convenience store with a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines.

Australians haven’t migrated to online shopping in the landslide once predicted. Figures released by the National Australia Bank last week showed the Online Retail Sales Index — a measure of spending on retail goods — fell by 0.8 per cent in April. But even if you prefer to visit a store and try clothes on, it’s being able to get those small essentials without the painful search that will hook you in.

And Amazon is moving offline, too. In December, it opened a prototype Amazon Go grocery store at its headquarters in Seattle, Washington, which uses a tracking system of sensors, algorithms, and cameras instead of cashiers or checkout lines. The eCommerce giant opened its first physical bookstore in New York last month — its seventh in the US. Amazon Books, like the Go store, does not accept cash, with Prime members using the app on their smartphone to pay and non-members using a credit or debit card.

Maxim Group today predicted a future in which Amazon will run everything from petrol stations to credit lines, Dow Jones reports.

“Consumers will be able to save money at the Amazon gas station because they belong to Amazon Prime, much like Costco members today,” said Maxim’s Tom Forte. “They will also be able to pick up and return their merchandise ordered online at the Amazon gas station.”

They’ll book their travel on Amazon, and have the firm send their suntan lotion ahead to the resort so it’s there when they arrive, he added.

But just as with Uber and co, there are serious questions over Amazon’s omnipotence. Critics say the retailer has a monopoly and is destroying small businesses — book stores, boutiques, grocery stores. There are also questions over how it pays tax.
There have been regular accusations that the company mistreats workers, with reports in December of “intolerable conditions” at a Scottish warehouse, with badly paid staff forced to sleep outside in tents to save on commuting costs.

A Sunday Times investigation found temporary workers at the warehouse were being penalised for taking sick leave and put under immense pressure to hit targets, and that water dispensers were often empty despite the intense physical nature of the job. Unions said workers were falling ill from overwork.

In the US, where Walmart is buying up smaller online retailers as it battles to compete with Amazon, there have been dozens of stories about inhumane conditions at its warehouses. But workers who spoke to Mental Floss in 2015 said conditions were relatively typical for warehouse work. In 2012, after an expose on the searingly hot summertime conditions, Amazon announced plans to spend $52 million to install airconditioning.
The company is now recruiting for hundreds of jobs in Australia as it prepares for its highly anticipated debut. It has broadly positive reviews on job sites Indeed and Seek, although there were complaints about difficult management, tough targets and short lunch breaks.

Amazon is a massive tech corporation and — mirroring Facebook, Apple and Google — there are justified concerns over its practices and treatment of employees as it grows.
However, it is time Australia caught up with the rest of the Western world and actually knew what those were.

By Emma Reynolds for www.news.com.au

Is Amazon under-valued?

Amazon is one of the largest companies in the world, but its valuation leaves plenty of room for growth. The stock’s valuation multiples don’t do justice to the growth prospects of this e-commerce giant.

Amazon experiences 27% year-on-year sales growth and this growth profile is simply too good for a company trading at only 3,2-times revenue.

Relatively weak operating margins have long been a roadblock for Amazon. But massive growth in both sales and margins in Amazon Web Services (AWS), as well as the growing dominance of Amazon Prime in the US, mitigate such concerns and make a strong case for undervaluation in the equity.

Amazon’s international segment currently operates at negative operating margins. However, the trend looks set to reverse as Amazon Prime penetrate these markets.

Future growth

Amazon’s primary top-line growth factors are international expansion and Amazon Web Services. AWS will improve overall margins, but international expansion is still in a negative margin situation. The trends have exacerbated in 2016.

In the full year 2016, North America represented almost 60 percent of total revenue while international and AWS represented roughly 30% and 10%, respectively. There is room for growth here, and it isn’t unreasonable to expect Amazon to be able to replicate North American success in other developed regions of the globe.

Source: www.seekingalpha.com

Australian retailers are woefully unprepared for the imminent entry of US tech giant Amazon and many could go under if they don’t lift their game.

The online goliath is due to hit Aussie shores this September but a new analysis shows almost a third of Australian retailers are blissfully unaware Amazon is preparing to set up shop.
Only 14 per cent have put any serious thought in to competing with global brand.
This blissful ignorance could be a huge mistake.

While some of the smaller retailers unaware of Amazon’s plans could be hit hard, an analyst told news.com.au one of Australia’s major stalwarts could suffer greatly: Woolworths’ struggling discounter Big W.

Amazon is hoping to launch in Australia in September.

The Commonwealth Bank Retail Insights Report, released today, found 49 per cent of retailers are unfazed by Amazon’s Australian push, with only 11 per cent seeing the company as a significant threat to their business.
Yet, in the US the so-called ‘Amazon effect’ has seen its share price skyrocket as shoppers flock online, while bricks and mortar retailers shutter shops.
CommBank’s National Manager of Retail, Jerry Macey, told news.com.au many Aussie retailers had no idea what they were in for.

“30 per cent of retailers said they aren’t even aware of Amazon and that was even bigger number for small companies, purely online stores, or retailers in rural areas.
“This is concerning when you consider the impact Amazon has had on the US, a very mature market.”
A third of retailers had no idea Amazon was coming to Australia, claims the Commonwealth Bank Retail Insights Report 2017

The key area where retail is falling behind is innovation.
CommBank measured levels of innovation across a range of Australian industries.

While half of Australian retailers were experimenting with new strategies to attract and retain customers — just above the all industry average — they still lagged behind the telecommunications, education and mining and sectors.

Worryingly, retail innovation was erratic, often uncoordinated and the value retailers were generating from trying new things was less than half that of the average of all other sectors.

“In retail, innovation is not holistic. There are small innovations, in one area of business, but if you look at strong innovators they are being innovative across a number of areas like marketing, organisational structure, product and process,” said Mr Macey.

The online innovations that were occurring in retail, like click and collect, weren’t game changing and were way behind industry leaders.

“Just look at Amazon Go — this is a physical store where you pick things off the self and sensors know what you’ve put into your bag and you can just walk out — that’s innovation,” he said.

Amazon has launched the Amazon Go trial supermarket where hi-tech sensors mean customers just grab products off the shelf and go, paying directly through their Amazon account.
Amazon has launched the Amazon Go trial supermarket where hi-tech sensors mean customers just grab products off the shelf and go, paying directly through their Amazon account.Source:Supplied
Geoff Dart, a retail consultant with DGC Advisory agreed Amazon would change Australian retail.
“They will have an impact. If you’re a retailer, you always have to assume the worst when Amazon comes in.”
The US company was the next wave in a retail revolution sweeping across Australia’s high streets and shopping centres already changed forever by the emergence of international fast fashion brands.
But, said Mr Dart, new competitors — such H & M, Zara, and Uniqlo — had already forced some home grown stores to buck up their ideas. As such, many were now far better prepared for the onslaught of Amazon.
“Australian retailers were very complacent, but if you look where they are now Myer has really lifted, and so have Kmart and Target.”
Myer now stock rival TopShop’s products in their stores.

Rather than battling against the overseas onslaught, Myer is now actively working with would be competitors — such as TopShop and UK department store John Lewis — by stocking their products.

However, there was one long standing Australian retailer that Mr Dart was worried about.
“Big W don’t know who they are in my opinion, they are stuck in the past while Amazon know who they are have a good customer proposition.”
In the six months to January, Big W’s sales slumped 6 per cent while its earnings fell 137 per cent leading to a loss of $27 million.
News.com.au contacted Big W to ask how they were innovating, fighting back against increased competition and bringing in new customers. The company chose not to comment.

Following Woolworths’ closure of the Masters home improvement chain late last year, speculation is rife that the company is preparing the ground for either a sell-off or float of Big W.
Nevertheless, Mr Dart didn’t think Amazon would get a completely free ride when it lands.
While last week Fairfax reported that Amazon is planning to “destroy the retail environment in Australia”, Australia’s huge size and relatively small population would mean Amazon’s warehouse and distribution costs would be higher compared to other markets.
In particular, Mr Dart said Amazon would struggle in a key area which will please Coles and Woolies.

“They’re going to fail at food. Australians are very conservative when it comes to food and if they have a bruised banana in their delivery, Amazon is going to have to replace it and that’s not going to happen.”
For Australian retailers, their trump card was their store network, he said, as it gave brands a presence on the ground. Mr Dart predicted further consolidation in the sector, citing JB Hi Fi’s recent purchase of The Good Guys.
But the real innovation could be if competitors started working together to combat the international online threat.

“Retailer co-operation is a big opportunity. Why couldn’t you pick up a JB laptop you have ordered online from a Bunnings or Kmart? All of them have fixed costs and want to amortise that and one way of doing that is to increase traffic and people picking up goods is a way to do that.”

Mr Macey said some Aussie retailers were being ingenious at innovation.
He cited efforts to ‘personalise’ the shop by allowing customers to visualise online a new rug in their living room, say, or how they would look wearing a new shirt.
However, on the whole, retailers needed to have an innovation reality check.

“Retailers need to be honest in where they are in terms of their ability to innovate. They need to take advantage of changes in the marketplace, experiment, not be afraid to fail but if they do fail, fail fast and inexpensively.
“Retailers need to build a innovation culture and be agile and creative in the future.”

By Benedict Brook for www.news.com.au

eBay recently launched eBay Business Supply, a new rebrand that brings together its business and industrial category, SAP Ariba Spot Buy and eBay Wholesale Deals solutions, to a single platform. eBay said that Business Supply “centralises” the e-commerce company’s business-to-business offerings and gives companies of all sizes the opportunity to buy and sell supplies and equipment in several product categories.

eBay already brings in a large number of B2B sales — more so than even Amazon Business. eBay reports it generated $4-billion in annual B2B sales, above the $1-billion Amazon Business (formerly known as Amazon Supply). However, Amazon Business has been around for only a year, and even $1-billion in sales during that first year is impressive, according to Spend Matters opinion.

eBay has added features to its B2B sales offerings in recent years, partnering with SAP Ariba in 2014, for instance. The partnership allows procurement professionals to buy certain supplies from vetted eBay sellers within Ariba’s e-procurement solution. The deal, as Spend Matters pointed out back in June 2014, offered some value for corporate procurement organisations.

As Pierre Mitchell, chief research officer at Spend Matters, wrote in a previous article, the partnership meant procurement practitioners that were Ariba customers would be able to “help their requisitioners find stuff while staying ‘in context’ of controls of e-procurement — and also helping to reduce maverick spend and improve the quality of the requisitioner experience.”

However, Mitchell also questioned the partnership between eBay and SAP on multiple fronts, and, now that it’s been two years since the announcement, and with the introduction of eBay Business Supply rebrand effort from eBay, Mitchell’s questions seem to persist:

“This latest announcement from eBay and SAP Ariba is about eBay trying to catch up with Amazon Business. There’s nothing much here for procurement organisations to cheer about. I don’t dispute the historical B2B volume advantage of eBay over Amazon, but Amazon Business is a fundamentally orienting itself to the needs of B2B buyers – not just sellers.

“For example, the eBay Wholesale Deals capability is geared towards business re-sellers, not business end users. In a spot buy scenario, Procurement wants speed, selection, ease of use and controls from whatever eProcurement system it’s using. For smaller organisations with no eProcurement system, Amazon has been clever to offer simple eProcurement-like functionality natively. The only thing new here is SAP Ariba’s Spot Buy Customers being able to curate a controlled product catalogue of a handful of US suppliers who’ve signed up.

“This obviously doesn’t support the breadth of items needed in a true spot buy scenario. I don’t usually call out competitors, but the Tradeshift Shop product is a much more innovative and elegant approach.”

Source: www.spendmatters.com

Amazon is pushing deeper into business-to-business e-commerce, which one analyst estimates could add $18-billion in company revenue by 2020.

The B2B unit, Amazon Business, began as Amazon Supply in 2012. The initiative was rebranded in April 2015 and Amazon — which posted 2015 revenue of $107-billion — recently indicated it reached more than $1-billion in annual sales, with 300 000 customers.

Bank of America Merrill Lynch analyst Justin Post estimates Amazon Business will reach gross merchandise volume of $3,5-billion this year, resulting in revenue of $3-billion.

He anticipates GMV of $8-billion next year and revenue of $6,4-billion. By 2020, estimates Post, Amazon will hit GMV of $25-billion and $18,6-billion in revenue.

“Based on recent management comments, Amazon Business appears to be ready for prime time, and we wouldn’t be surprised if Amazon invests in marketing to raise awareness as Amazon’s procurement systems improve,” said Post in a research note.

According to market research firm Frost & Sullivan, the US B2B market is expected to reach $1-trillion in sales by 2020, and $6,7-trillion globally.

“We think B2B provides significant runway for growth, which could help Amazon sustain its growth rates and premium valuation for many years,” wrote Post.

He has a buy rating on Amazon stock, and a price target of 840.

Amazon stock ended trading up more than 1%, to 704.20, in the stock market today, after touching a record high above 722 on May 12. It’s an IBD Leaderboard stock.

Amazon Business sells a broad line of goods, such as office supplies, tools, industrial equipment, tractor equipment and office products. Competitors in the B2B e-commerce sector include Staples, HD Supply Holdings, Office Depot, Grainger and Fastenal.

By Brian Deagon for www.investors.com

Amazon: the comeback king

Wall Street’s love affair with Amazon has been rekindled following shares climbing by nearly 10% on Friday after Amazon reported a better-than-expected profit.

Amazon shares have been on a tear since early February, surging about 45%. Amazon is now back in breakeven territory for the year and less than 2% below the all-time high it hit in December.

Warren Buffett is a big fan of the company too apparently – even though his Berkshire Hathaway does not own the stock.

Buffett went out of his way several times to praise Amazon and CEO Jeff Bezos during Berkshire’s annual shareholder meeting on Saturday. He did so again on CNBC Monday morning.

Amazon’s triple-digit P/E ratio probably scares off Buffett – who is a consummate value investor.

But it’s telling that he is willing to admit how successful Amazon is – especially since it would appear that much of that success is coming at the expense of Walmart, which is one of Berkshire’s biggest investments.

Amazon passed Walmart in market value for the first time ever last July. It is now worth about $320-billion – nearly $110-billion more than Walmart.

Analysts think Amazon has a lot more room to run too. The consensus price target is just shy of $800 a share. That’s almost 20% higher than current levels.

R.J. Hottovy, an analyst with Morningstar, says that Amazon’s international units are starting to pick up steam. He expects that Amazon will add a lot more Prime members in Europe and Japan in the coming quarters.

He added that Amazon seems a little more focused now and is less prone to invest in non-core businesses that may not really help boost Amazon’s revenues and Prime member base. Remember the Fire Phone flop?

“The biggest investment risk with Amazon is Jeff Bezos’ brain. It all depends on how aggressive Amazon wants to be,” Hottovy says. “As long as Amazon’s investments build the user base, then I still think there is some upside to the stock.”

Clothing is one of those investments that should boost revenue and profits.

The company recently has started to sell its own private label clothing brands. John Blackledge, an analyst with Cowen, wrote in a recent report that he expects Amazon to become the biggest apparel retailer in the U.S. as early as next year.

Yes, Amazon often gets criticised for heavy investments in free shipping and new businesses.

But Michael Pachter, an analyst with Wedbush Securities, says those initiatives appear to be paying off. Gross margins surged in Amazon’s most recent quarter.

The stock is extremely expensive. It trades at nearly 130 times 2016 earnings estimates of $5.33 a share. But Pachter says that investors buying Amazon today are taking a much longer-term view.

“You’re not paying this much for Amazon because you like the quarter. You’re paying this much because you think earnings are going to go up a lot,” he says.

“The only reason for it to trade at this valuation is because people think Amazon will make $20 to $30 a share a year someday,” Pachter adds.

Buffett might even believe that. But don’t hold your breath waiting for him to buy the stock anytime soon. It’s still way too rich for his blood.

By Paul R. La Monica for www.abc17news.com

Amazon puts roots in SA

While global online retail company Amazon.com widens its net with online food shopping and walk-in bookstores, its Web services division is making inroads in South Africa.

Amazon Web Services says it is recruiting 250 people for its offices in Cape Town and Johannesburg.

The company offers cloud computing for other companies. Cloud computing refers to the on-demand delivery of IT resources and applications via the internet with pay-as-you-go pricing.

The head of technology and solutions architecture at Amazon, Attila Narin, says the company had recognised the potential for growth in South Africa where Cape Town and Jo’burg acted in perfect unison.

“Cape Town is ideal for the technical side of things, and Jo’burg is perfect for the customer-facing side of things. In fact, some of the core technology for Amazon’s cloud computing used across the globe was built right here in Cape Town,” says Narin, who is based in Luxembourg but worked in Cape Town from 2006 to 2008, and was back in the city this week.

“This city has an amazing pool of talent, as universities like UCT and Stellenbosch produce some of the finest engineering students on the continent. That is the main criterion for choosing our development centres, so Cape Town ticked the boxes.”

Narin says that Johannesburg, which opened its Amazon Web Services office last year, is “the economic heart of the country and the continent too, so it made sense to have our customer-facing presence there”.
Narin says the company’s successes in South Africa included Entersekt, Travelstart, and Medscheme.

Stellenbosch-based Entersekt developed South Africa’s first security solutions for mobile banking, resulting in a decline in credit card fraud.

Travelstart, an online booking service for flights and hotels, “shows how you go beyond the normal borders with cloud computing. It is now present in all of southern Africa and the Middle East”.

Medscheme uses cloud computing to keep patient records, making them “more accessible to medical service providers”.

Narin says South Africa was a “highly innovative and creative space for start-ups”.

By Tanya Farber for www.timeslive.co.za

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