Can Amazon motor past the competition and innovate car buying?
Amazon has moved from being an online bookseller to an Ecommerce powerhouse where you can get almost everything you’d ever want. But not cars. At least, not yet. That’s about to change if Jeff Bezos gets his way. The company is currently recruiting auto experts in the UK to help it move into the space, according to trade magazine Automobilwoche. As yet, details are thin on the ground, but investors are taking note: shares of British digital automotive marketplace Auto Trader Group have sunk by around 4%.
Amazon is up almost 30% so far this year
SOURCE: Yahoo Finance
Cars are likely to be a tough nut for the company to crack. Although they’ve seen huge success in some areas – books, entertainment, consumer electronics – they’ve failed to make inroads in others. Like food and fashion, cars come with specific consumer demands, and this means these product categories are harder to disrupt. In the case of food, for example, refrigeration and perishability are new concerns that simply don’ apply to Amazon’s other product listings. Learning how to navigate them is a challenge; convincing consumers that you’ve learnt is another challenge.
At present, this ‘trust gap’ makes automotive sales a difficult proposition for the online giant. Consumers would rather buy their vehicles from showrooms, garages or – at a push – dedicated Ecommerce platforms run by carmakers themselves. Amazon has been pushing slowly into this market through a number of related listings (like auto parts and Amazon Garage), but there’s a long way to go.
The company’s dedication to the market rests on one of Amazon’s founding principles: that retail can be done better online. Whether selling cars becomes the company’s next Kindle, or its next Fire Phone, remains to be seen.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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