Amazon's New Shipping Plans May Cause Trouble for Kindle
Just as Amazon's (NASDAQ: AMZN) Chief Executive Officer Jeff Bezos confirmed that the company is likely to go up against competitor eBay (NASDAQ: EBAY) in delivering some products in one day, supply chain sources are stating that Kindle Paperwhite shipments could be in trouble.
According to DigiTimes, the second half of the year could be difficult for Amazon to keep up on shipping its innovative new product due to "ongoing issues with mass producing the device." While high demand is certainly not bad news for Amazon, it places the company in the same predicament as Apple (NASDAQ: AAPL) with being unable to satisfy customers quickly.
However, shipping the devices in a timely manner could get smoothed out down the road. With plans set to build new distribution centers throughout the country, Bezos is on a mission to help the company become the dominant online shopping center for every consumer. As the new additions begin to sprout up, Amazon customers may expect to receive products in the mail faster than ever before.
Bezos noted in a recent interview with The New York Times that Amazon will likely be able to turn two-day shipping into one-day quite soon. However, in order to accomplish such a feat, the company will begin collecting sales tax – a drawback that may frighten loyal customers.
Weighing the advantages and disadvantages, it is clear that Amazon believes same or next-day delivery will offset the disappointment shoppers may feel when the checkout page shows sales tax tacked on to each item. However, with competitive prices currently dominating the tech market, Amazon has positioned itself to sell original tablets for cheap and profit big through services – despite the added tax cost.
"Amazon is already dropping its ebook prices to match Apple's, in the cases where Apple had priced a book lower than Amazon did. For instance, James Rollin's Bloodlines and J.A. Jance's Judgment Call were each $10.94 in the Kindle Store this morning and $9.99 in iTunes. Just a few hours later, both books are down to $9.99 at Amazon as well," paidContent reports.
As Amazon continues to undercut competitor's prices, the popular retailer has seen an incredible increase in shares. Year-to-date, Amazon is up almost 48 percent.
While the company gears up to pull off next-day delivery, analysts at Piper Jaffray praise the stock noting that Amazon is the best way to play the long-term eCommerce theme.
Amazon is currently up 0.48 percent near $256.90 in pre-market trading on Wednesday morning.
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