You might remember that when they launched last December, everyone was asking: “Is that all there is? Is that it?” That’s because its prices were high and the range was limited. Well, they were just taking their time.
Morgan Stanley’s Tom Kierath and his team have done some work on Amazon’s offering now, to coincide with the launch this week of the “Fulfilment by Amazon” service – basically a logistics service to vendors.
Amazon is now offering free delivery on 27,000 SKUs (stock keeping units) with a value of over $49 and it lifted the total number SKUs offered on its site from 1.4m to 4.4m between December 5th and January 29th.
That was subsequently reduced back to 1.5m “as it has streamlined to focus on products that are actually selling”.
More important have been the price reductions:
What happens next?
Amazon has said it will launch Amazon Prime mid-2018, which will bring together its existing Amazon Prime Video (US$5.99/ month) and Amazon Music (A$4.99 / month) offer as well as unlimited 1-2 day delivery.
Says Morgan Stanley’s Kierath: “Given the pace at which it has improved its offer its difficult to predict how quickly retailers will be impacted, but based on the improvement to date we think that it is increasingly likely that retailers will need to lower prices and invest in improving delivery times/cost”.