Market Overview

Pro: Investors Overlooking Amazon's Treasure Trove Of Data

Pro: Investors Overlooking Amazon's Treasure Trove Of Data, Inc. (NASDAQ: AMZN) doesn't get enough credit for leveraging its treasure trove of data to gain a major advantage over its rivals, according to Hilding Anderson, head of retail strategy for North America at Publicis Sapient.

What Happened

Amazon's retail portion of its earnings report was strong across the board but investors could be overlooking its data strategy, Anderson said on CNBC. Specifically, Amazon is collecting and analyzing data to model its business in a way that "most retailers just aren't doing."

Consumers are familiar with Amazon's use of data to better recommend follow-up sales but is now using the same approach elsewhere in the business, he said. Amazon can use the data to better anticipate where it should hold inventory or how to best label a product.

"There are thousands of models that they built across the organization," he said. "I think that's the backstory of this high performance."

Why It's Important

Amazon also deserves credit for managing its workforce by grouping together employees into smaller teams, Anderson said. By contrast, other retailers are known for large teams that are slowed down through needless bureaucracy.

R5 Capital founder and CEO Scott Mushkin added to the conversation and believes Amazon's retail business has now shown it can "stand on its own." The retail business is on track to generate as much as $6 billion in free cash flow by 2021.

As such, Amazon should consider spinning off its AWS unit and CEO Jeff Bezos might consider it, he said. Bezos is a "rational" CEO that is also shareholder friendly and could recognize an opportunity as AWS loses some market share from potential cloud customers who don't want to be associated with the core retail business.

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Photo credit: Álvaro Ibáñez from Madrid, Spain, Wikimedia Commons


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