Amazon Opens Appstore in China

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The world’s largest online retailer, Amazon.com Inc. (AMZN) has recently announced the launch of its Appstore in China, giving Chinese customers access to Amazon’s broad selection of Android mobile applications (apps).

The Appstore in China is focused on Android apps that users can download or purchase for their Android handsets and tablets. Amazon’s store provides a vast selection of paid as well as free apps and games. The new Amazon store offers both free and paid apps, whereas Google's (GOOG) appstore, Google Play offers only free apps in China.

In the last few months, Amazon has been aggressively pursuing opportunities in China. Recently, the company offered cloud storage services and launched its Kindle e-book store. Chinese customers can now access e-books using Android and iOS apps.

Amazon has been operating in China for some time but has failed to increase its market share owing to stiff competition from local players such as Alibaba Group Holdings Ltd. and Beijing Jing dong Century Trading Co. Additionally, Amazon competes with China's leading telecom carriers, such as China Unicom (Hong Kong) Ltd. and China Telecom Corp., each of which offer their own application stores.

We believe that despite the strong competition and various regulatory hurdles in China, the new Appstore could help Amazon attract new users due to its reputation and credibility. While the company is not selling Kindle tablets in China yet, the launch of the app store and the e-book store will provide customers a wide selection of Kindle e-books and help Amazon tap a promising market.

Amazon could capture a significant share of the Chinese market over the next few years; which should enable the company to generate an additional several billion dollars a year in revenues.

Amazon is one of the leading players in the extremely fast-growing retail e-commerce market and its strength lies in its huge scale of offerings, its broad reach and platform approach. We believe that Amazon’s strong balance sheet helps the company to capitalize on investment opportunities and strategic acquisitions, thereby improving growth visibility.

However, heavy investments in its Kindle tablet computers, new warehouses and data centers may weigh on its near-term results.

Amazon currently retains a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth considering include Yahoo Inc. (YHOO), Facebook Inc. (FB) and Barnes & Noble, Inc. (BKS). While Yahoo carries a Zacks Rank #1 (Strong Buy), Facebook and Barnes & Noble carry a Zacks Rank #2 (Buy).

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