Amazon’s next frontier to conquer? Auto parts

23/01/2017

Having toppled high street booksellers, electronics stores and toy shops, Amazon has now turned its eye on the $50bn US after-market auto parts business.

As reported in The New York Post, the e-commerce giant – which will likely become America’s number one apparel retailer in 2017 – has signed contracts with the country’s largest parts makers.

While Dorman Products was the first to sign up, others have followed, with claims that Amazon was in some cases paying 30% more than the high-street firms just to land the contracts.

The firm’s decision has dealt a serious blow to leading US retailers – including O’Reilly Auto Parts and Genuine Parts – who have exercised an iron grip on the market over the last few years.

Steve Handschuh, chief executive of the Motor & Equipment Manufacturers Association, said that Amazon may even snatch up some of the regional parts distributors to further cement its position.

Amazon is already selling parts for less than its brick-and-mortar rivals; a 34 Series Red Top Optima Battery was recently being offered at $166 on Amazon, versus $216 at AutoZone.

In a September report, investment bank Jefferies said Amazon was offering same-day delivery for auto parts in 40 major cities — at prices averaging 23% less than those of high-street retailers.

The report said added Amazon’s ability to advance its position had been made easier because the chains had aggressively pursued foreign-sourced private-label parts .

One auto parts executive described it as the classic tipping point.

“The majority of us now are selling directly to Amazon.”