What other businesses can Amazon undermine?
Amazon (AMZN) is getting into the used video game business. It makes sense. Video games should be easy to market through e-commerce. The recession should make used products more attractive.
The news hit video game retailer Game Stop (GME) hard, as it should have. According to The Wall Street Journal, "GameStop has been enjoying strong growth even as other retailers have been battered by the recession." Amazon may take away some of that growth. But that is the old news.With many retailers weakened by the economy, Amazon may be able to get into a number of new businesses. It has the balance sheet, the technology platform, the brand, and the tens of millions of customers that it needs to expand into almost any market that allows products to be sold online.
Amazon already sells dozens of categories of products from books to electronics to groceries. Where might it step up its efforts? Clothing retail for one. It is already in this business in a limited way, but if it wants to expand its franchise, it almost certainly could because so many of the chains in the industry are in trouble. The huge online retailer could do some real damage to the traditional brands in the industry.
Used cars could be another big business for Amazon. As dealers close due to weak sales, consumers need to find new outlets to sell cars. The idea may not be far-fetched. Many new cars are bought online already.
Amazon has a chance to use the recession to considerably widen its product offerings and it will almost certainly do just that.
Douglas A. McIntyre is an editor at 24/7 Wall St.