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Amazon's Prime Continues to Grow Irrespective of Price Hike

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Amazon (AMZN - Free Report) is leaving no stone unturned to strengthen its presence in the e-commerce sector with the help of its robust Prime subscription-based services.

Per Bloomberg, the company continues to witness growing adoption of Prime in spite of the hike in its membership price which surged from $99 to $119 a year in April 2018.

This can be attributed to the customer friendly offers, exciting discounts, extremely fast delivery services and rich as well as expanding video content portfolio.

Upon the closing of the last quarter, it was revealed that the Prime — since its inception in 2005 — crossed over 100 million paid members worldwide.

Further, the ongoing mega summer shopping event called Prime Day is in sync with the improving subscriber base of the company. Further, this is playing a significant role in bolstering the traffic as well as sales number on Amazon’s e-commerce platform despite the technical hindrance on its site on the opening of Prime Day.

We believe all these factors will continue to drive its top-line growth.

Coming to the price performance, shares of Amazon have returned 55.9% on a year-to-date basis, outperforming the industry’s rally of 31.5%.



Prime Benefits – Key Catalyst

Amazon’s strong focus toward enhancing its Prime services will continue to drive the Prime membership.

The company has recently announced the availability of Prime benefits at all Whole Foods Stores as well as Whole Foods Market 365 stores nationwide.

The company has also rolled out delivery services for natural and organic products purchased at Whole Foods via Prime Now in Chicago, Houston, Indianapolis, Minneapolis and San Antonio.

Moreover, the company’s free two-hour grocery delivery service for the Prime shoppers at Whole Foods is now available in Atlanta, Austin, Baltimore, Boston, Cincinnati, Dallas, Denver, Los Angeles, Philadelphia, Richmond, Sacramento, San Diego, San Francisco and Virginia Beach.

Additionally, Prime members in the United States have started receiving unlimited free two-day shipping on over 100 million different items. The company also offers 5% cash back benefit to Prime members who use Amazon Prime Rewards Visa card while shopping at any Whole Foods store.

Further, Amazon has recently launched Prime Wardrobe which holds promise in bolstering its presence in the fashion retail.

Prime to Benefit Retail Position

We believe the above mentioned Prime benefits will continue to improve its market share in the retail industry.

Moreover, Prime has strengthened Amazon’s competitive position against some major players in the retail industry namely Walmart (WMT - Free Report) , Best Buy (BBY - Free Report) , Target (TGT - Free Report) and many more.

Amazon’s Prime Day which started on Jul 16 has intensified the retail competition. The above mentioned big retailers as well as the small brick-and-mortar stores have also called out for sale in order to counter the tough competition stemming from the Prime Day celebration.

While Walmart’s Ultimate Summer Savings sale with exciting online deals has started on Jul 14, Target’s online sale coupled with free delivery services will start from Jul 17.

Further, Best Buy has reduced the prices of its product at par with the prices at which Amazon is selling on Prime Day.

However, Prime Day’s innumerable exciting deals on a wide range of luxurious as wells as necessary grocery products will continue to aid the company in sustaining momentum in the market.

Currently, Amazon Carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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