Equity Research Consumer | E-commerce November 16, 2016 Ryan Domyancic +1 312 364 5412 Update Report (16-098)
[email protected] Bhavan Suri +1 312 364 5341 Amazon.com, Inc.
[email protected] Comprehensive Pricing Survey Underscores the Value of Prime Stock Rating: Outperform Company Proile: Aggressive Growth We randomly selected 100 items from 32 retailers to compare their in-store assort- ment and pricing with Amazon. We concluded that Amazon’s assortment remains Symbol: AMZN (NASDAQ) strong, the Prime eligible selection has increased signiicantly since 2014, and its Price: $719.07 (52-Wk.: $474–$847) Prime eligible selection is priced at a discount to brick-and-mortar retailers. Market Value (bil.): $347 Long-Term EPS Growth Rate: 20% Prime eligible selection priced at a 4% discount to physical retailer locations. Dividend/Yield: None Our 2016 pricing survey found items sold by Amazon or by third-party sellers that Fiscal Year End: December utilized Fulillment by Amazon (FBA) were priced at a 4% discount to identical items in physical retail locations. For our comparison, we did not include shipping cost, because Prime eligible items ship for free as part of Amazon’s Prime program Estimates 2015A 2016E 2017E or if the order value exceeds $49. Revenue (bil.) $107 $137 $168 EBITDA (bil.) $10.8 $15.3 $21.3 Majority of Prime eligible overlapping items were same price or less expensive EPS $1.25 $4.88 $9.37 than physical retail locations. For Prime members and order values that exceed the $49 free shipping threshold, we found that 67% of Prime eligible overlapping Valuation items were the same price or less expensive on Amazon versus retail stores.