Please ensure Javascript is enabled for purposes of website accessibility

I Told You Sew, Amazon

By Rick Munarriz – Updated Nov 11, 2016 at 6:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The online retailer wasn't built to quilt, so it got into the Fabric.

If a stitch in time saves nine, then Amazon.com's (NASDAQ:AMZN) timely acquisition of online arts and crafts store Fabric.com may save it from making mistakes down the road.

Fabric.com specializes in custom-cut fabrics, patterns, and sewing tools. Yes, you can already buy some of those things through Amazon, but Amazon has never been deluded into believing that its brand can do it all. That's why the company launched Endless.com two years ago, as a high-end retailer for fashionable handbags, footwear, and accessories. It's why Amazon snapped up Audible -- the market leader in digital audiobooks -- even though many of its other digital-media initiatives are homegrown.

Will Fabric be a winner under Jeff Bezos' wing? It should be. Terms of the deal aren't public, but Amazon is unlikely to overpay for a niche website. It is doing well lately, so it's not as if the leading e-tailer needs to buy its way into relevance.

The move is simply a sound one. Instead of beefing up its home and garden category with custom-ordered fabric cuts, Amazon can cash in on a loyal and established audience of sewing enthusiasts. Amazon can then enhance Fabric's business by incorporating its checkout system and fulfillment prowess. No doubt, other advantages like the cross-selling opportunities and the economies of scale will come into play.

Just as Gap (NYSE:GPS) launched Piperlime two years ago as a way to enter the online footwear market, Amazon is well-served in introducing or snapping up specialty stores to feast on dedicated audiences.

Yes, Amazon sells engagement rings, but it will never have the panache of Blue Nile (NASDAQ:NILE). This doesn't mean that Amazon needs to swallow down Bluefly (NASDAQ:BFLY), Celebrate Express (NASDAQ:BDAY), and PC Mall (NASDAQ:MALL) to matter more in specialty apparel, birthday-party goods, and computing products, though it certainly wouldn't hurt if the prices are right.

Amazon may have never been built to quilt, but it has bought its way into a niche of needle-gripping diehards.

For related Foolishness:

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$115.15 (1.20%) $1.37
The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$8.39 (-0.95%) $0.08
Blue Nile, Inc. Stock Quote
Blue Nile, Inc.
NILE
PCM, Inc. Stock Quote
PCM, Inc.
PCMI

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.