Amazon (AMZN) Plans To Explore Europe's Online Car Market

Amazon.com, Inc. (NASDAQ:AMZN) is reportedly contemplating entry into Europe’s online car market. German trade weekly Automobilwoche reported that the company is planning to sell cars in Europe and has already started recruitment.

The report stated that Amazon has appointed Christoph Moeller, a former automotive expert at advisory firm Oliver Wyman, to oversee the new endeavor.

The company is said to invest heavily in the business, which is expected to operate from Luxembourg. It is planning to start sales in the U.K and could expand to other countries as well.

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Amazon’s Automobile Push So Far

Last year, the company launched "Amazon Vehicles" information hub that offers videos, pictures, specs, and customer reviews for new and used cars and the option of entering car details to find applicable parts and accessories.

In Europe, Amazon runs a partnership with Fiat Chrysler (NYSE:FCAU) as a part of which it offers a limited range of Fiat models in Italy.

We note that year to date, Amazon has underperformed the Zacks Internet-Commerce industry. The stock returned 30.7% compared with the industry’s gain of 38.8%.

Despite this underperformance, we believe there are a lot of factors that could turn the wheels in favor of Amazon. These include expansion of Prime, Fulfillment By Amazon, its grocery initiatives and efforts around Amazon Web Services (AWS). The company capitalizes on its execution strength, robust performance and technological prowess.

Watch Out Competitors

Amazon has a record of turning anything it touches to gold and the new venture may not be anything different.

If the news is true, it should be a concern for players who are testing waters in the space. BMW, for example, is trying out online sales in some markets. Jaguar Land Rover and Mercedes-Benz are running urban brand stores.

Another Diversification Move

In the light of these reports, we believe Amazon is eyeing a product as well as geographical diversification with a single move. That makes sense as the company continues to face slow growth and mounting competition from the likes of Alibaba (NYSE:BABA) and eBay (NASDAQ:EBAY) in the e-commerce space.

The move is yet another example of how a long history of execution, growing focus on innovation, technological prowess and a huge cash balance are helping the company to diversify in any area that holds potential.

Amazon could create far more value for investors if it repeats its domestic success internationally.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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