How Amazon's Competition Will Actually Help Boost Sales

jeff bezons amazon kindle

Amazon’s sales will surge as attacks from Wal-Mart, Sony, and Barnes & Noble help raise the company’s profile, says Goldman analyst James Mitchell in a note.

His reasons:

  • Sony and Barnes & Noble don’t have e-readers in stock. Both companies will heavily promote their e-readers, which are sold out/unavailable until January. Amazon has Kindles in stock. Consumers will go to Amazon for e-readers when they learn they can’t give a Sony Daily Reader or a Barnes & Noble Nook as present in December.
  • Wal-Mart’s limited price-war with Amazon raises its profile. A price war is typically a bad thing, but in this case it helps Amazon as it reinforces the fact that Amazon sells good stuff at low prices. It’s good for Amazon’s brand.

Amazon’s gross margins might get whacked a little bit, but its sales will grow. Mitchell is raising his revenue estimate for the fourth quarter to $9.1 billion from $8.9 billion.

See Also TBI Research’s report on how Amazon is currently losing money selling e-books.

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