Amazon (AMZN) – Pricing Power & Anthropic – March 30, 2024

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Amazon (AMZN) – Pricing Power & Anthropic – March 30, 2024

Amazon launched same-day prescription delivery in LA and New York this week. Amazon will utilize a combination of drones and vans for fulfillment and should expand to 10 more cities in 2024. Amazon Prime costs $14.99 per month. With it, consumers enjoy a plethora of expedited and deeply discounted fulfillment, free grocery delivery, discounted prescriptions, Amazon Prime’s streaming service, Amazon’s music streaming service, complementary Audible audiobooks and photo storage. Consumers continue to lean on all of these services more & more; Amazon continues to layer in more utility. Why do I say this?

We have previously reviewed fulfillment regionalization, organizational restructuring, 3rd party selling, advertising, and new supply chain services as powerful margin tailwinds. We don’t talk a lot about Amazon Prime pricing power. Amazon has seamlessly raised its pricing in the past with zero material pushback. Why is that? Because this consumer subscription is arguably the most valuable on the planet. Unique value is what drives pricing power; we have years upon years of evidence for strong pricing power; I fully expect that to continue. Amazon is a margin puppet master that can pull this lever whenever it wants to. It has the most arrows in its quiver for driving margin accretion out of any other company I follow. This is simply yet another item to contemplate.

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