Almost nothing seems out of reach for Amazon.com Inc. these days. Grocery stocks crumbled when the company bid for Whole Foods Market Inc. in June. Blue Apron Holdings Inc. slumped after Amazon got into prepared food kits. Sports chains slipped when Nike Inc. agreed to sell its wares on the e-commerce giant’s website.
But Amazon can’t disrupt everything, at least according to Morgan Stanley analysts led by Brian Nowak. They researched what attributes make for an Amazon-proof industry and introduced a framework on Wednesday so investors can gauge how susceptible companies are to Jeff Bezos’ corporate wanderlust.
Here’s a look at the five guidelines Morgan Stanley said are most important.
Be Unique
The first hurdle is tailored goods. One-of-a-kind items are less likely to be at risk from Amazon. “Commodity products are more susceptible to Amazon disruption,” the analysts wrote. “While unique and bespoke items are less likely to be purchased through Amazon’s marketplace.” Areas of travel such as hotels and vacation packages, formal apparel, and luxury goods are examples, they noted.
Regulation
The more onerous a sector’s rules are, the more costly it is and the bigger the payoff would have to be for Amazon to consider moving into the space, the Morgan Stanley analysts said. Health care, auto manufacturing, financial services and telecom are examples, they added.
Business Models
Products that are less profitable, less frequently ordered and heavier aren’t as attractive to Amazon’s main e-commerce business. So do-it-yourself auto parts, dollar stores, and home furnishings should be more immune to competition from the company, the analysts wrote. However, Amazon’s recent deal to acquire Whole Foods shows the internet retailer is willing to take on tough product categories, they added.
Talking to Customers
If there is a large amount of customer interaction required following the sale of an item, Morgan Stanley said Amazon is less likely to be interested. Those safest in this regard include health care, home improvement and specialty construction goods.
Contract Negotiations
The more time consuming the purchase is, the less likely Amazon is to want a piece of the action, the analysts wrote. One example: Large industrial contracts that can take months rather than days or weeks to negotiate. Sectors covered include pharmaceuticals, real estate and auto manufacturing.