Amazon rivalry fears hit value of comparison sites
Shares in MoneySupermarket. com and GoCompare.com have fallen amid fears that Amazon is laying the groundwork for its own insurance comparison website.
The online retail giant, which has a fulfillment centre in Swansea, has reportedly held talks with a number of insurance executives over whether companies would be willing to contribute products to a prospective comparison site of its own.
While the type of insurance to be sold is not clear, home and motor insurance are popular on existing websites in the UK.
Amazon currently offers warranty extensions in Europe in partnership with The Warranty Group, as well as Amazon-branded credit cards in the UK and Germany.
It reportedly posted job adverts for a new insurance business in Europe last year.
The news knocked stocks of potential rivals yesterday, with shares in MoneySupermarket.com falling around 3.4%.
The Newport-based GoCompare.com saw a fall as much as 10% at the start of trading, but was only lower by around 1% by mid-morning.
Amazon said it would not comment on rumours or speculation.
Commenting on the report, Russ Mould, investment director at AJ Bell, said: “Expanding into financial services may seem a strange move for a retailer, yet it makes sense when you consider Amazon’s incredible reach and engagement with such a wide range of consumers.
“Home, travel and car insurance are already highly competitive markets from both an underwriting perspective and the number of price comparison sites.
“That won’t bother Amazon, as its muscle power and wide reach could give it a fighting chance of making a big success from facilitating the sale of third-party insurance policies.
“Other industries linked with a potential move by Amazon include pharmaceuticals and business supplies distribution. And it has already made waves with food delivery and logistics.”
Amazon already runs Amazon Fresh, its nascent delivery business, and last year splashed out more than £10bn to acquire supermarket chain Whole Foods last year.
Wales’ only FTSE 100 company, Admiral, has said that it would be open to joining an Amazon site.
“If it establishes a comparison site, then I suspect Admiral will be interested in being a member, potentially. Price comparison is the main source of distribution of our products and we’ll await with interest what they do,” Admiral chief financial officer Geraint Jones told Reuters.
The Press Association reported last year that Amazon was weighing up plans for a corporate partnership that could see it begin selling cars to UK consumers on its website after whetting its appetite in European markets including France and Italy.
Mr Mould added: “So what’s next? Can Amazon become an estate agent? Perhaps a more logical move would be to extend into the travel sector, offering discounted holidays, cruises and car rental.”
Amazon UK made headlines earlier this month when earnings showed its corporate tax bill fell by £2.8m last year, despite seeing its pre-tax profits nearly treble to £72.4m.
But the company only paid £1.7m in tax after deferring £2.9m of that total.