Amazon.Com Inc (NASDAQ: AMZN) is challenging Woolworths Group Ltd (ASX: WOW) and Coles Group Limited (ASX: COL) territory by selling items at discounted prices.
Amazon recently launched into selling items in the food & drink category. You can now get Dolmio sauce, Oreo cookies, Doritos chips, Nestle condensed milk, John West tuna, Coke and Milo cereal delivered via Amazon – doesn’t all of that sound like a good meal?
However, the Australian Financial Review is reporting that multinational suppliers are favouring Amazon with lower prices on brands such as Colgate, Huggies, Omo and Finish.
A Woolworths source told the AFR: “The question is are they selling below cost, which would be inappropriate. Do they have global [pricing] deals or are Australian suppliers giving them better deals than the major supermarket chains – it’s not clear” .
As a Amazon Prime member I found that, for example, Amazon is selling Colgate Optic White toothpaste $1.04 cheaper than Woolworths Online.
Woolworths and Coles have had to reduce prices to stay competitive with Aldi in recent years.
Amazon has large buying power with international consumer brands because it buys large volumes of products for its US and European markets.
It will be interesting to see what Woolworths and Coles can do to compete.
Investors thinking about AMZN, Woolies or Coles should consider whether the current prices match or exceed the growth potential of the underlying businesses.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).