Fear of Amazon's Auto-Parts Efforts Overblown
The moats of the large aftermarket retailers should be able to keep online competition at bay.
Although auto-parts retailers’ share prices dropped after January media reports that Amazon (AMZN) is signing distribution agreements with aftermarket auto-parts makers, we believe the threat of disruption is overblown.
While Amazon has been a category-changing competitor in many segments, customer demand for near-instantaneous availability and a high level of service is difficult for digital participants to meet, and we have long held that auto parts are more insulated from digital disruption than most of retail. Though do-it-yourself customers might be more easily enticed by Amazon’s price-based appeal, we believe DIY and professional clients require speed and services from their retailers, making an industrywide repricing based on digital-only sellers’ activities unlikely.
Zain Akbari does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.