It still continues to add 20% new authors every quarter. Nook Press will offer readers new features along with great price and provide them with fresh and useful content. With this platform, the company is targeting the growing demand for self-published content among consumers which contributes more than 20% of Nook Book sales every month. Nook Press is seen as an opportunity that may help drive the company’s earnings in the future.
Improving operating margins
Amazon.com, Inc. (NASDAQ:AMZN) posted solid first-quarter results with sales of $16.07 billion, an improvement of 22% year over year, although it was slightly below the consensus estimates of $16.27 billion. However, operating income was $181 million, which was well above the consensus estimate of $142 million. Its North American segment generated revenue of $9.39 billion and the international segment added $6.68 billion. Profits were mainly driven by the growth in media and electronic sales of $5.06 billion and $10.21 billion, respectively. Its web services also helped revenue growth with their increasing popularity in web and content services, especially the cloud services.
Third party traders also supported Amazon.com, Inc. (NASDAQ:AMZN)’s earnings, as 30% year over year increase was observed in worldwide unit growth. These traders accounted for 40% of total worldwide unit sales. Third party traders are small traders or merchants who sell their products using the company’s online platform for trading in exchange for a fee. These fees have generated millions of dollars for Amazon.com, Inc. (NASDAQ:AMZN) and have been an important contributor to its margins.
On the other side, a 70% increase in fees has annoyed the small traders as they feel that it is quite high. Because of this move by Amazon.com, Inc. (NASDAQ:AMZN), some traders may shift to other companies which charge lower fees. But, with higher fees, the company will also see increase in its profitability as I anticipate all traders are not going to shift.
Also, because of growing e-commerce trends and adoption of mobile payments, the investors can expect better earnings from the company going forward.
Bottom line
Amazon posted better margins in the first quarter, and with gaining popularity of its web services and third party traders’ contribution, it will see improved profitability in the coming years. Though higher fees may influence profitability in the short run, but increasing usage of online and mobile payments should offset this loss.
With accelerating mobile adoption and e-commerce trends, eBay should see its market expand. Also, PayPal is expected to gain both online and offline market share with the support of the POS initiative.
Although Barnes & Noble, Inc. (NYSE:BKS)’s has witnessed declines in its Nook tablets in the past, but by adding gaming and educational apps to its tablets, the company expects to see increase in its market share. Nook Press, with its innovative new publishing platform, is expected to drive traffic growth in future.
Thus, I recommend buying these online retail stocks.
The article 3 Must Buy Online Retailers originally appeared on Fool.com and is written by Shweta Dubey.
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