Amazon.com's (Nasdaq: AMZN) back on the acquisition trail again, and this time it's gobbling up small e-tailer Woot. Some might call Amazon crazy for this purchase. But in the video below, Fool.com analyst Eric Bleeker says he thinks Amazon is crazy like a fox.
Woot's business model revolves around selling one unique deal at a time. While that might sound like a strategy with pretty limited growth opportunities, the company has managed to expand. Aside from its main site, Woot also offers kids', shirts, and wine sites.
Interestingly, Amazon tends to just leave its acquisitions alone. The company bought Zappos last year, and has basically allowed the shoe-selling site to act autonomously. In a world filled with "synergies" and cutting redundant costs in buyouts, it's kind of an oddball strategy. You definitely wouldn't see a competitor like Wal-Mart (NYSE: WMT) engaging in these kinds of bolt-on acquisitions of companies with such unique cultures.
So, if Amazon isn't fully integrating Woot, why buy the company? For one thing, Woot's an amazing Internet business. It gets about 2 million unique visitors, but commands more than 20 million total visits a month. That's a 10:1 ratio, which shows an extremely engaged user base. As a comparison, Amazon's ratio is closer to 4:1, in an area that Amazon, as well as every Internet company, works doggedly to increase.
When Amazon purchased Zappos and left it alone, a likely part of its plan was to offer scale and back-end distribution expertise to increase Zappos's profitability. Bleeker is sure both of those areas could conceivably help Woot as well; however, he sees the most power in Amazon continuing to learn new engagement methods with members. Amazon's long proven to be a visionary in new fields it's entered. Woot should continue that streak of wins.
For more on Bleeker's thoughts on the acquisition, view the video below:
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