Amazon Extends Ties With Sears, Bolsters Retail Presence

Amazon (NASDAQ:AMZN) has recently extended partnership with Sears (NASDAQ:SHLD) in a bid to expand its presence in the vast e-commerce market.

Per the terms and conditions of previous deal, Amazon was utilizing the services provided by the auto centers of Sears for the installation of car tires ordered by customers on Amazon.com. Initially, there were 47 centers providing this service.

Per the new deal extension, Sears will provide 71 additional auto centers to Amazon for installation purpose, taking the total count to 118.

The customers can avail the service at more locations now, strengthening the services provided by the company. This will also enrich customer experience.

Coming to the price performance, shares of Amazon have returned 45.3% over a year, outperforming the industry’s rally of 28.7%.

Car Tire Market Holds Promise

With the growing number of automobile purchases, the demand for car tire is also increasing. We believe Amazon will be able to deliver better customer experience with the help of the latest move. This will reinforce the company’s presence in the car tire market.

Further, both the companies might think of extending their services beyond just the installation of tires. The auto centers might start offering the services of oil changes and alignments in the cars.

As part of this tie-up, Amazon’s tire offering will also improve with the addition of Sear’s DieHard brand tires.

Per the report from TechSci Research, the global online tire market is expected to grow at a CAGR of 7% between 2018 and 2023. The online retail sector remains the key catalyst.

The customers of Amazon have already given positive feedback about the service. We believe the increased number of auto centers will improve the customer base of the company, consequently, driving the top line.

Intensifying Competition

Amazon’s strong focus toward bolstering footprint in the online retail sector with the aid of its effective and strong retail strategies will continue to benefit its market position.

In the retail sector, Amazon’s prime competitor, Walmart (NYSE:WMT) , is leaving no stone unturned to boost presence in the e-commerce market.

According to the latest report from Mordor Intelligence, the global retail industry is anticipated to grow at a CAGR of 5.3% between 2018 and 2023 and to reach $31.9 trillion by 2023.

Amazon’s partnership with Sears will help in strengthening its competitive position against Walmart which also keeps tire as a product.

We note that the company’s strategic partnerships and improving customer services will continue to help it in reaping benefits from this high growth potential market.

Zacks Rank & Another Stock to Consider

Currently, Amazon sports a Zacks Rank #1 (Strong Buy).

Another top-ranked stock that can be considered in the retail-wholesale sector is Expedia (NASDAQ:EXPE) which sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Expedia is currently pegged at 14.52%.

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