Amazon prepares for raging holiday sales

With new distribution centers and big tablet orders, the retailer lays the framework for busy fourth quarter.

By Kim Peterson Jul 8, 2011 2:07PM
Christmas in July? For Amazon (AMZN), the answer is yes.

The retailer has Christmas on the brain these days as it prepares for a huge holiday season. This week, the company announced it will open two new distribution centers in Arizona and Indiana. It's already opened three other centers this year.

The company is on track to open nine new centers this year after opening 13 last year, Business Insider reports. It's a good sign that Amazon is expecting a whopper of a holiday season -- so much so that it's willing to rack up the expenses in preparation.

There's also a big new product in the works: Amazon's own tablet computer. A report in DigiTimes says Amazon has shot up to the No. 2 spot in terms of tablet orders from manufacturers. Apple (AAPL) is No. 1, of course, reportedly placing orders for 14 million to 15 million iPads from Foxconn Electronics for the third quarter.

But Amazon takes the second spot, placing orders for 1 million to 1.2 million units. Amazon hasn't officially announced a tablet yet, but ZDNet calls the product "one of the worst-kept secrets in the industry." Amazon chief executive Jeff Bezos, when asked about the possibility in May, simply said to "stay tuned."

Amazon has seen great success with its Kindle e-book reader, so it's not hard to imagine the company pushing forward with an affordable tablet that may not have all the bells and whistles of the iPad but is completely integrated with all of Amazon's services and appealing to its user base.

So while Amazon's continued spending to build out its infrastructure may frustrate investors, the company is laying the pieces for a busy holiday season. And it will likely be a significant competitor in the tablet race by then as well.

Investors have already clued in to this. Amazon's stock price has been on fire, rising 15% in the past month alone to top $216 Friday. The stock is within range of its 52-week high of $217.80.

That kind of rapid appreciation shows that investors have big hopes for the stock heading into the holiday season and beyond.

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