Amazon Buy with Prime could become a $3.5 billion deal: Morgan Stanley
According to Morgan Stanley, Amazon could have another winner with its Buy with Prime service. The company started out as an online bookseller, grew into an e-commerce giant, and embraced cloud computing with Amazon Web Services. Its latest program, Buy with Prime, allows Prime members shopping on another retailer’s website to check out with their Amazon account and get free two-day delivery. The service could bring in billions for Amazon, said analyst Brian Nowak. AMZN YTD Mountain Amazon’s Year-To-Date Performance Every 2% of non-Amazon.com packages that switch to Buy with Prime would increase Amazon’s sales by $5.9 billion in 2025 and annual earnings before interest and taxes or increase EBIT by $1 billion, he estimated in a note Tuesday. Its bull case of 5% of non-Amazon volume equates to $3.5 billion in annual EBIT. Amazon monetizes the service through multiple revenue streams, including service and fulfillment fees and sponsored ad revenue, Nowak pointed out. Amazon’s new service competes directly with Shopify, which in September warned its merchants that those using Buy with Prime were violating Shopify’s terms of service. Nowak said Amazon has an advantage. “Buying with Prime shipping is competitively priced compared to competitors while offering the fastest delivery,” he said. “Prices between AMZN and SHOP are about the same (~$8 for shipping each package)…although AMZN offers 1-2 day shipping versus SHOP’s 2-3 day shipping.” The other option is for buyers to coordinate their own shipping via delivery services like UPS and FedEx, which is more expensive, Nowak added. Amazon reports quarterly earnings on Thursday. Its shares are up more than 21% this year. – CNBC’s Michael Bloom contributed to the coverage.
https://www.cnbc.com/2023/02/01/amazon-could-be-sitting-on-another-3point5-billion-business-morgan-stanley-says.html Amazon Buy with Prime could become a $3.5 billion deal: Morgan Stanley