Amazon.com Inc. (AMZN) has announced that it will acquire Goodreads, a book recommendation site that helps its readers to find and share books of their choice, for an undisclosed sum.
Launched in Jan 2007 by Otis Chandler and Elizabeth Chandler, Goodreads allows users to freely search for books and other reading materials. It allows users to add books to their shelves and also write reviews. It enjoys a steady following on social networking sites such as Twitter, Pinterest, Facebook and others. Currently, it has 16 million members with 525 million books added to their shelves and 23 million reviews written to date (as mentioned on the website).
Goodreads brings a platform that will help Amazon understand what readers like to read, which could further help its book-selling business. The acquisition will not only reduce competition for Amazon but also diversify and expand its international base.
The coming together of these two entities will provide both authors and readers a broader platform. Amazon, on its part, can extend the Goodreads experience to millions of readers through its Kindle platform.
As per a report by IDC, Apple is leading the tablet market with 43.6% market share followed by Samsung at 15.1%. Amazon’s Kindle Fire still remains far behind at 11.5%. However, unlike the other players, Amazon is primarily a retailer, so its focus is more on selling goods. Therefore, the importance of its Kindle tablet is as a platform for these sales. In this respect, it is worth noting that Amazon does have a Kindle app to sell books on hardware produced by others. If the app offers more, it could retain its position as the leading book seller.
Amazon is one of the leading players in the extremely fast-growing retail e-commerce market. Of course, competition from eBay Inc. (EBAY), Apple Inc (AAPL) and Barnes & Noble, Inc. (BKS) remains as strong as ever. While the strong growth prospects are making the market more competitive by the day, Amazon continues to maintain and even grow its share on the back of its consistent and reliable service. Amazon’s scale of offerings, its broad reach and platform approach are the keys to its success.
In the fourth quarter of fiscal 2012, Amazon reported revenues of $21.3 billion, up 54.0% sequentially and 22.0% from the year-ago quarter. This was within the guidance of $20.3–22.8 billion (up 55.7% sequentially and 23.3% year over year at the mid-point), although short of our expectations. Year-over-year revenue growth was 23% excluding unfavorable currency impact.
Amazon has a Zacks Rank #3 (Hold).
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