Amazon (AMZN) Getting More Luxurious, New Platform Set to Tap $300B Luxury Market - BofA Securities

BofA Securities’ research analyst Justin Post maintained a "Buy" rating on Amazon (NASDAQ: AMZN) after reports emerged that the e-commerce giant is preparing to launch a new luxury platform in September.

Women's Wear Daily reported on Tuesday that Amazon will include a dozen luxury brands from the US and Europe. In the initial launch phase, only one brand will participate. The website will host brands that will operate their own place to sell on Amazon.com. The model is similar to Alibaba's Tmall.

The e-commerce giant has already committed hundreds of million of dollars for this project. It is building a new $100 million fulfillment center in Arizona specifically for luxury goods, while an additional $100 million is committed for a marketing campaign for the new website.

“Luxury retail represents a significant category to unlock, with a large TAM and high profit potential, especially given very low penetration by Amazon currently. Bain estimates luxury brands represent a $90bn annual opportunity in the US alone ($300bn Globally),” wrote Post in a note to clients.

Post argues that a key change for Amazon would be allowing brands a distinct website look and feel, without inventory integration with the rest of Amazon.

“We see a material revenue opportunity in the category in a blue sky case, assuming Amazon’s 40% Western markets eCommerce share in luxury (which would take 10+ years to achieve) yields a $120bn GMV opportunity in the category”.

Therefore, Post maintains his “Buy” rating on Amazon stock with a price target of $3,560.

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $3346.74 yesterday.

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