Value Investors: Could This Stock Be the Amazon of Canada?

Indigo Books & Music Inc. (TSX:IDG) is following a path to profitability similar to Inc. (NASDAQ:AMZN). There could be massive upside ahead for this stock.

| More on:
Question marks in a pile

Image source: Getty Images

Indigo Books & Music (TSX:IDG) is Canada’s largest book, gift, and specialty toy retailer, with store locations in all 10 provinces and online sales through the company’s website and mobile applications. The company is a leading gift destination with an extensive selection of books, paper, toys, baby, and lifestyle products. The company’s digital platforms feature an extension of the in-store shopping experience, with an expanded selection of book titles and general merchandise.

Digital platforms business potential

Indigo’s digital platforms provide customers with a seamless shopping experience. These platforms are an extension of the in-store shopping experience with an expanded selection of book titles, eBooks, and a broad assortment of paper, baby, and lifestyle products. These digital platforms provide a rich user experience and promote customer loyalty and repeat purchases with an engaging experience that encourages customers to return frequently.

Further, the company’s digital platforms offer a wide range of shipping options along with easy returns. The company’s mobile application also offers a number of time-saving and stress-reducing features, such as managing wish lists, scanning any product in store for online purchase, and shipping to the customer’s home or to a gift recipient.

In 2020, the online channel represented approximately 17% of the company’s revenue. However, the company experienced a significant acceleration of online sales fueled by retail stores closures and government stay-at-home orders in response to the COVID-19 pandemic. The company‘s online channel continues to experience significant growth in comparison to the prior year.

Popular loyalty programs

Indigo’s loyalty program allows members to earn and redeem points online and in-store, seamlessly. This program engages members through mass promotions and targeted one-to-one promotional offers, as well as invitations to exclusive events and member-only shopping experiences. The program offers an members immediate discount on eligible products, free shipping and the ability to earn points on almost every dollar spent at the company’s Canadian stores and website.

Loyalty programs are important in generating significant customer commitment and value. In addition, the programs enable the company to better understand Indigo’s customers. The company monitors and evolve the program constructs and communications to ensure the programs meet business objectives.

Diverse product categories

Indigo currently has an active list of approximately 200,000 book titles purchased from more than 25 major publishers. In addition, the company offers over 12 million titles through Indigo’s digital platforms. The company is also committed to becoming the premier year-round gifting destination in Canada with a curated assortment of home, baby, toys, and electronics products.

Optimization strategies

Indigo employs inventory management strategies to analyze sales data to maintain adequate inventory levels, make inventory adjustments, and maximize full-price sales through the company’s retail and digital channels. The company is a leading destination for developmental and technology toys and baby books.

The company’s design and global sourcing team develops proprietary merchandise exclusively for Indigo. Products developed by the design and global sourcing team are designed to improve the breadth and quality of products offered by the company.

Indigo is following a path to profitability similar to There could be massive upside ahead for this stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Nikhil Kumar has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.

More on Investing

worry concern
Dividend Stocks

Worried About a Recession? 2 Canadian Blue-Chip Stocks to Buy and Hold for Dear Life

A recession is worrisome. Buying two blue-chip TSX stocks and holding them for the long term will deliver stable, less…

Read more »

online shopping
Tech Stocks

Why You Should Buy Shopify Stock Before It Rockets Even Higher!

SHOP stock is down 70% from all-time highs. Let's see why it makes sense to buy the dip in February…

Read more »

money cash dividends
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

Are you looking for some of the best Canadian Dividend stocks to buy this year? Here are three great options…

Read more »

Golden crown on a red velvet background
Energy Stocks

3 Canadian Dividend Aristocrats to Buy and Hold for Passive Income

Are you seeking safer options amid elevated market volatility? Consider these three Canadian dividend aristocrats to receive uninterrupted passive income…

Read more »

A colourful firework display
Tech Stocks

3 Venture Capital Stocks That Started 2023 With a Bang

Even if a company starts a year strong, it may not hold that momentum throughout the year. Still, these VC…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Suncor Energy Stock: Has it Bottomed Out?

Suncor Energy Inc (TSX:SU) stock has been falling lately. Has it bottomed out yet?

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Stocks for Beginners

2 Top Stocks to Buy in February 2023

Here are two of the best Canadian stocks you can buy in February 2023.

Read more »

Aircraft wing plane

Bombardier Stock: Should You Invest in the Current Bullish Trend?

Capturing a bullish trend from beginning to end is an exception, not the rule. In most cases, you will only…

Read more »