Amazon.com, Inc. (Nasdaq: AMZN) has been a major market disruptor in the U.S. in recent years. But as the company continues to attack new markets in North America, pushing its way into similar markets around the world may come with a unique set of challenges for Amazon.
Morgan Stanley recently hosted an investing event in London called the Amazon Disruption Symposium. The event included 12 research analysts and five industry experts from several different markets Amazon has targeted, including retail, grocery and health care. According to Morgan Stanley analyst Brian Nowak, the consensus opinion was that Europe may be a much tougher nut to crack for Amazon than the U.S. has been.
While Amazon has a stellar reputation among U.S. retail shoppers, Nowak says it isn’t yet fashionable among European shoppers. Amazon may be the gold standard of e-commerce in the U.S., but Nowak says its second fiddle to German platform Zalando in Europe. Zalando currently has more European brand partnerships, more merchandise selection and a platform that is more focused on shopping experience rather than search function.
“Lower reliance on the department store industry structure and a more vertically integrated apparel industry are also likely to make Europe more difficult for Amazon than it has been in the U.S.,” Nowak says.
Amazon has also reportedly been working on expanding its “last-mile” logistics and delivery capabilities in the U.S. In October, Amazon began testing its own U.S. delivery service called Seller Flex. However, Nowak says the last mile may prove to be a bigger challenge for Amazon in Europe.
“It may not be as economical to deliver its own packages in continental Europe on account of more competitive delivery pricing and higher labor costs, which make up 70 percent of last mile costs,” Nowak says.
Finally, Morgan Stanley’s health care experts said the European health care industry is already being impacted by online sales, and Amazon may have a huge opportunity to get in on the action. Analyst Vincent Meunier says generic drug sales could be Amazon’s first target, but there are opportunities in hospital supplies, wound care, corrective lenses, hearing aids and dentistry.
Although Amazon’s global expansion phase will have its own set of hurdles, Amazon has broken…
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