Personally I think that Amazon has essentially unlimited growth opportunity, much higher than even the most amazing, most profitable product companies like Apple or Google. Product companies have a Microsoft problem: after they dominate a given market (and Microsoft pretty much dominated a lot of the most valuable segments of software market) and that market matures into slow growth, they have a very hard time finding new opportunities and consequently only grow with the size of the market, and as we've seen with Microsoft's flat stock price, Wall Street doesn't like that.
To me, Amazon's is Merchant Of Everything, both physical and digital and Everything is a very big market. Amazon grew to its current size by exploiting shift to on-line purchasing but today they're big enough to start taking advantage of their size. Walmart conquered U.S. with lower prices but Amazon can offer even better prices because they don't have to operate physical stores with staff, just warehouses. Amazon is not done until they have a warehouse for each Walmart store, Best Buy store etc. and their competitive advantage grows with every warehouse they build.
And when there are more Amazon's warehouse than Starbucks, there's international market to conquer.
Additionally Bezos has shown that he's very comfortable competing aggressively, running the business at the edge of profitability, which makes sense if you think that Amazon's ultimate ambition is to drive every other merchant out of business by offering lower prices and become the Merchant Of Everything.
Amazon has got to be more sensitive to the vicissitudes of the global economy though. I could never stop using Google or Apple products in my day-to-day. Whereas my entire life is pretty much an uphill battle to buy less shit off Amazon. If push came to shove, the MP3/book/DVD/gadget/clothing purchases would be the first to go. Also if it suddenly got a lot more expensive to ship physical goods, Amazon's core business would take a beating.
Those goods would still have to be shipped to a traditional store, where traditional staff drove in and stood around and dusted it, so you could drive (or whatever) in and get it.
As opposed to drop-shipping the most economical one on demand, and not wasting all the time and shipping stocking places, hoping you'll come in and buy from them before the junk is obsolete.
Stores, except tailors and the like, are dead.
As for their warehouses, cities expand and real-estate, especially when at rock-bottom, is a pretty safe bet compared to renting.
To me, Amazon's is Merchant Of Everything, both physical and digital and Everything is a very big market. Amazon grew to its current size by exploiting shift to on-line purchasing but today they're big enough to start taking advantage of their size. Walmart conquered U.S. with lower prices but Amazon can offer even better prices because they don't have to operate physical stores with staff, just warehouses. Amazon is not done until they have a warehouse for each Walmart store, Best Buy store etc. and their competitive advantage grows with every warehouse they build.
And when there are more Amazon's warehouse than Starbucks, there's international market to conquer.
Additionally Bezos has shown that he's very comfortable competing aggressively, running the business at the edge of profitability, which makes sense if you think that Amazon's ultimate ambition is to drive every other merchant out of business by offering lower prices and become the Merchant Of Everything.