Credit: Shutterstock photoNearly a month after Amazon (AMZN) announced it was getting into automotive space with Amazon Vehicles, the reality is setting in. Amazon isn't looking to just sell auto parts -- it's looking to completely disrupt the entire automotive buying process.
Americans spent $570 billion on new cars in 2015, but that number is dwarfed when you look at global vehicle sales. Automotive parts is another $67 billion industry, according to Morgan Stanley, and it's looking like Amazon is going after this in full force. Investment bank Jefferies did a price study on Amazon's automotive parts selection and RockAuto and the results lead Jefferies to believe that "[Amazon] may become a longer term competitor in 'traditional' auto parts."
According to Jefferies, Amazon has a 98.7% SKU rate (in other words, the amount of available products for purchase), surpassing such legacy retailers like Advanced Auto Parts, O'Reilly and Autozone, who have a 95%, 86% and 55% SKU rate, respectively. This could mean Amazon is actually ahead of its goal to get more than just specialty products, which it previously said it would do so next year.
Given the breadth and speed at which it's adding auto parts to the site suggests that Amazon is not going to stop at just auto parts.
Amazon may wind up partnering with dealerships in the beginning selling cars on its site, because the rules for buying cars over the internet still largely only apply to Tesla. With Amazon's 300 million monthly active shoppers, that's an enormous benefit for any automotive company and provides a huge advantage over any dealership.
Amazon announced a partnership with Hyundai to let Amazon bring cars to its Prime consumers (the program is called Prime Now. Drive Now) for a test drive and then refer them to a nearby dealership for purchase. When the deal was first announced, a statement from Adam Goetsch, Amazon's director of automotive, may have been a window into the company's future plans.
"Our goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way,” said Goetsch. That bold part -- "every step of the way" -- leads one to believe Amazon has ambitions for being a one-stop shop for automotive.
Over time, as rules and regulations get cleared up on selling cars directly to consumer, major car companies like GM, Ford and others may wind up just selling their wares on Amazon, providing Jeff Bezos and his company with another huge source of revenue.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
