Amazon AMZN is looking to expand presence in the liquor retail market aggressively on the back of its robust delivery system and distribution strength.
This is evident from its recent talks with San Francisco Board of Supervisors. Reportedly, the company has already applied for Type 21 liquor license at the Department of Alcoholic Beverage Control and is now seeking the approval.
The license will permit the company to deliver alcohol to customers in San Francisco, consequently strengthening its e-commerce capabilities in the city. Notably, Amazon’s Prime Now warehouse located at 888 Tennessee Street in Dogpatch will be leveraged for this purpose.
Consequently, this will allow Prime members residing in San Francisco to enjoy liquor delivery from 8 AM till midnight daily.
Additionally, Amazon intends to establish a 200-square-foot store in the city from where it will conduct direct sale of liquor to customers. The storefront will operate from 8 AM to 4 PM every day.
We believe Amazon’s presence in San Francisco will strengthen with enhancement of its product and services offerings on approval of the license. Further, this will help the company to attract customers to its platform and store.
Furthermore, the move will aid Amazon to attract subscribers to its Prime program which acts as the key catalyst for its e-commerce business.
Strengthening Liquor Services in US
The latest initiative of Amazon bodes well for its deepening focus toward strengthening liquor offerings across the United States.
The company rolled out two-hour booze delivery via Prime Now in a bunch of Texas cities which include the likes of Austin, Dallas-Fort Worth, Houston and San Antonio last year. It also began alcohol delivery service in Atlanta, Houston and Washington, D.C., to name a few during the last fall season.
Further, Prime members enjoy one-hour delivery service for beer, wine and spirit in Cincinnati, Chicago, Columbus, Los Angeles, Minneapolis, New York City, Phoenix, Portland, OR, Richmond, San Diego and Seattle.
Amazon Ups Game Against Alcohol Sellers
The above-mentioned strong endeavors and the latest San Francisco initiative are likely to intensify the competition in the alcoholic drinks market of the United States.
Per a report from Statista, revenues in this particular market is projected at $251.4 billion for 2019. Further, the figure is expected to witness a CAGR of 2.7% between 2019 and 2023. The report suggests that beer segment has turned out to be the largest contributor in the overall alcohol market.
Amazon’s rapidly expanding liquor services are likely to help it in penetrating this market rapidly which does not bode well for the alcohol sellers in the United States.
Further, the company is also likely to give tough competition to the big retailers who stock liquors in their stores like Walmart WMT and Target TGT.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
A better-ranked stock in the retail-wholesale sector that can be considered is IAC/InterActiveCorp IAC which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for IAC/InterActive is pegged at 20.45%.
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