Amazon’s stock delivers, but can they deliver…groceries?

Amazon has long been one of the darlings of a rather surly market as one consistent standout in the world of tech stocks. Besides a short-lived drop in May, Amazon (AMZN) has been great in 2013 and is now reaching new highs for the calendar year.

One of the reasons that Amazon has started living in the $280+ range is that investors believe in their ability to innovate. What innovations do I speak of? How about grocery delivery? That’s right, apparently Amazon has been “planning a major roll-out of an online grocery business that it has been quietly developing for years.”

Through their AmazonFresh service, Amazon plans to bring their grocery delivery service to more and more areas on the west coast. The service has existed in Seattle for several years already. Of course, it will be limited to urban areas, especially in the beginning, but it could be in as many as 20 metro locations by next year, which has intrigued investors.

Of course, profit margins on groceries are low, but Amazon is built on the model of finding cheap ways to do business so that they can thrive on low profit margin items.

Furthermore, Amazon is bolstering their Amazon Prime video on demand service by acquiring Viacom’s large library of content. The move is doubly effective because it comes just as Netflix’s own deal with Viacom comes to an end. This, along with the free two-day shipping that Amazon Prime enables for customers, makes having a Netflix subscription an even tougher proposition for many going forward.

While the struggle for tech-related companies is constant innovation, Amazon is showing an eye for continued expansion, even as they continue their stranglehold on online retail sales. For those reasons, their stock is going to continue being as close as you find to a sure thing for some time.