Online retailer Amazon.com (NASDAQ:AMZN) did quite well over the four-day Thanksgiving weekend in terms of moving merchandise in its consumer electronics department. The company says that its electronics category accomplished an astonishing feat for the very first time -- it brought in more sales than the book department. That's actually quite impressive, considering the fact that Amazon based the foundation of its business on tomes. The release cites a few examples of products that might drive sales for the rest of the season, including an Apple (NASDAQ:AAPL) iPod device and a Canon (NYSE:CAJ) digital camera.
Back in the early days of Amazon's rise to prominence, books were the company's bread and butter; but, as we all know, bread and butter does not make a tasty meal if ingested in perpetuity. The bookseller knew it would have to expand into other areas of interest and grab footholds that would potentially lead to serious competition with bricks-and-mortar stores for consumers who would never normally think of using online commerce for certain products. (In fact, Amazon is into all kinds of things now, such as searching initiatives and film showcases.)
Indeed, when Amazon started selling electronic devices, my first thought was: Would I really purchase a DVD player over the Web? I still feel that way and probably will never buy over the Web what I perceive to be a sensitive, fragile piece of electronics with a secure browser connection. Yet, get ready, because I am about to contradict myself (and make a point at the same time, I hope): I have purchased a computer from Dell (NASDAQ:DELL) over the phone (which, for our purposes here, we will call close enough to a purchase made over the Net). What's the difference? I mean, a computer is certainly more theoretically "sensitive" than a DVD player, correct? To my way of thinking, returning a defective DVD player to Amazon would be more of a hassle than consulting with Dell about a defective computer. Also, a computer purchase is a once-every-few-years event; buying electronics from Amazon on a more frequent basis would seem to be playing with fire, at least to my way of thinking. I buy from Amazon, but I usually go for the more traditional books and music discs.
But that's just me, and my narrow perception matters not in the grand scheme of things. The company is continuing to grow its electronics category, and people are becoming more and more comfortable with consumption of all kinds of devices via online protocols. The stock is appropriate for individual investors looking for some exposure to online retail growth, but since it does not carry a dividend yield and still, in my opinion, represents a speculative bet on a volatile future (after all, the Internet will continue to be an ever-changing, fluid climate of competition), it should be added only to a portfolio that is already well-positioned with some safer long-term bets, such as a few blue chips.
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More commentary on online businesses:
- What the heck does grilled cheese have to do with eBay (NASDAQ:EBAY)?
- Google (NASDAQ:GOOG) adds yet another wrinkle to its model.
- Overstock.com (NASDAQ:OSTK) says it's all about the "O."
Fool contributor Steven Mallas owns none of the companies mentioned.
