Interview with E-Commerce Times on Amazon which continues to be Wall Street’s darling. Morgan Stanley justified the upgrade by pointing towards Amazon’s growth potential in emerging markets such as China and Brazil as well as its strong fulfillment network. Indeed Amazon has been aggressively investing in BRIC countries implementing a “winner takes all” – strategy. It will continue to do so in 2013 and beyond. Last year the company made headlines by building out same-day delivery capabilities here in the US. Presumably these capabilities will also find their way into international markets. Once the build out is complete there will be no other company that is commanding a global ecommerce infrastructure of that magnitude. Amazon will operate in its own class.
There are a few watch-outs. First, making big bets by entering new markets as well as building out expensive warehouse infrastructure requires a lot of money. This strategy will impact Amazons ability to produce meaningful profits in 2013. Second, there is a high level of execution risk associated with such a strategy too. Brazil. Russia. India. China. These are vastly different markets, ecosystems and cultures. It takes a high degree of confidence to go to these places and make it happen all at once.
Amazon has proofed critics wrong in the past. The markets like its chances to capture a significant portion of the world’s ecommerce sales. Morgan Stanley predicts this number to hit $1 trillion in 2016. Amazon’s market share is projected to be well above 20%. Now, that would be exciting.