AAA: Amazon’s Automobile Ambitions?
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AAA: Amazon’s Automobile Ambitions?

Amazon has been one of the most successful online businesses to come out of the 90s 'dot com' bubble. First, it put independent bookshops out of business and totally revolutionized the book selling industry. A combination of low-prices, unbeatable choice, and quick shipping times simply outcompeted its rivals. Then it bought in the Kindle, and totally revolutionized the publishing industry. After that, it branched out into everything from electronics to groceries, and it’s fair to say that many brick-and-mortar retailers that are struggling in the western world are simply failing to combat Amazon’s incredibly powerful ecommerce machine. This year, Amazon will probably become America’s biggest apparel retailer. What’s next? Maybe, auto parts!

Amazon has started as it means to continue in 2017

SOURCE: Yahoo Finance

The DIY auto-parts market in the U.S. is worth a staggering $50 billion – and, if Amazonian mastermind, the company’s founder and CEO Jeff Bezos, is to be believed, it’s ripe for disruption. The company has quietly been striking deals with the country’s largest parts makers, including Robert Bosch, Federal-Mogul, Dorman Products and Cardone Industries, according to the New York Post, which cites an anonymous source.

Amazon bought in $128 billion revenue in the twelve months to September, and its auto parts business is already worth $2.5 billion. The Post, once more citing an anonymous source (this time, a confidential note from a Wall Street analyst circulated to an undisclosed number of clients) suggests this could double to $5 billion this year.

Can Amazon topple another industry? This remains to be seen: Bezos is not afraid of failure, and has taken unsuccessful gambles in the past (remember the Kindle Fire Phone? No, nor does anyone else). But, there is at least one argument that points pretty clearly in the ecommerce behemoth’s favour: a 34 RedTop Optima Battery costs $166 on Amazon. It costs $216 at AutoZone.

Twenty years ago, you would have noted a similar price discrepancy between Amazon and your local bookshop. 

Dominion holds Amazon in its Global Trends Ecommerce Fund.

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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.