6 Ways Amazon's European Business Will Likely Be Different Than The US

The "Amazon.com, Inc. AMZN Disruption Symposium," held by Morgan Stanley in London on Dec. 7, included a dozen analysts and industry experts who explored how the e-commerce giant differs across geographic regions.

The Analyst

Morgan Stanley's Brian Nowak maintains an Overweight rating on Amazon's stock with an unchanged $1,250 price target.

The Thesis

Here are the six main takeaways from the discussions, according to Nowak. (See Nowak's track record here.) 

1. The European apparel market will be "more difficult" for Amazon to break into compared to the U.S. market. Amazon is "less fashionable" in Europe than it is in the U.S., and only has agreements with "hundreds" of different brands versus competitors that have agreements with thousands.

2. It may not be as economically advantageous for Amazon to deliver its own packages across continental Europe due to more competitive delivery pricing from existing firms and higher labor costs, which would account for 70 percent of last mile costs.

3. Grocery, furniture and beauty products were called out as being strong selling categories in Europe. Amazon's Private Label strategy is seen as a tool "used to either fill gaps or fix margins."

4. Amazon is rapidly building out its cloud distribution capability to better compete with rivals. Also, AWS Aurora is one of the fastest growing products from the cloud offering.

5. Amazon could be eyeing an expansion into the European health care sector with the medical supply distribution, hospital supplies, wound care, corrective lenses, hearing aids and dentistry fields being the most exposed to Amazon.

6. Amazon is the top seller of physical music products in Europe and is also No. 2 in music downloads and No. 3 in music streaming. Amazon also plans to expand its Amazon Music Unlimited product to 28 new countries, so its streaming music presence will likely continue to grow.

Price Action

Shares of Amazon have gained more than 50 percent since the start of 2017.

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