By Sam Boughedda
In a note to clients on Monday, Morgan Stanley analysts revealed that Amazon's (NASDAQ:AMZN) incremental share gains increased "substantially" in Q3.
In the note, focused on retail and e-commerce data, Morgan Stanley said there were two recent developments and two implications from third quarter U.S. Census Bureau e-commerce sales data.
The first development is that e-commerce penetration of overall retail sales is reaccelerating at a more meaningful rate.
"We have been expecting a reacceleration in e-comm penetration in '22 and this dynamic is now playing out. Per U.S. Census data, adj. U.S. e-comm sales grew by ~11% in Q3'22 vs. overall adj. retail sales growth of ~8%. This ~370 bps spread widened vs. ~100 bps in Q2'22 and translates to a Q3'22 e-comm penetration rate of 19.2% (+63 bps y/y)," wrote the analysts.
The second development was regarding Amazon's incremental share gains. "Per our e-commerce sales funnel, AMZN's rate of incremental share gains increased by ~32 points, reaching ~71% of overall e-comm growth in Q3 (vs. ~39% in Q2). Said another way, AMZN took ~71c of every $1 of incremental e-comm sales growth in Q3," the analysts added.
The two implications were a gross margin headwind from e-commerce likely reemerging in 2023 and Walmart (NYSE:WMT) screening as among the best positioned to withstand a reacceleration in e-commerce.