levels to manage risks in trading $AMZN back to its previous ATHcopy & paste from the most recent Morgan Stanley's notes:
3 Reasons Capturing Consumables/Everyday Essentials Is Important:
1) Consumables/Essentials Make Up $1.6trln of US Offline Spend…Set to Drive ~45% of Incremental E-commerce Growth: We estimate US offline spend on grocery, household products, and personal care is $1.6trln...or ~47% of the remaining ~$3trln of offline US Retail Spend. Capturing a larger share of these dollars is important to AMZN’s long-term growth algorithm and its ability to continue to deliver faster than average retail top-line growth.
2) Consumables Have a Higher "Advertising Attach"...Leading to a Potentially Larger High-Margin Ad Business: We believe consumables have a higher than average “advertising attach” rate (advertising as a percent of GMV) given the long-standing use of advertising to build/expand/defend brands and trade-spend dollars used to drive volumes in offline retailer shelves. As such, the extent to which AMZN's consumables business becomes larger should enable AMZN to build an ever-larger high margin ad business.
3) Daily Habits Create Behavior Change: We have often written about AMZN's efforts to change consumer behavior (less shopping around, more online shoppers starting on AMZN, more repeat behaviors, etc.). Consumables and grocery are higher frequency, habitual purchases...so the extent to which AMZN can capture more of these purchases can drive behavior change and even more repeat long-term purchasing behavior (across all categories).
