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Amazon (AMZN) to Boost Grocery Sales With New Subscription Plan
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Amazon (AMZN - Free Report) is constantly making solid efforts to enhance its e-commerce offerings on the back of its Prime program. It is leaving no stone unturned to drive its Prime momentum on the back of perks, facilities and services.
This is evident from its latest trial of a grocery subscription service for Prime members, priced at $9.99 per month.
The new service is in the pilot stage, which is being tested in three U.S. cities - Denver, CO; Sacramento, CA; and Columbus, OH.
With this service, Prime members will get access to unlimited grocery deliveries from Whole Foods and Amazon Fresh on orders more than $35. They will also get unlimited 30-minute pickup on orders of any size.
Currently, Prime members pay a fee of $6.95 for Fresh orders between $50 and $100 and $9.95 for orders less than $50. They are also required to pay a $9.95 fee for Whole Foods orders.
Members will not be required to pay any of the fees with the new service. This, in turn, will likely encourage signups for the new service and boost the adoption of Prime membership.
The latest move is likely to bolster the company’s grocery retail business as well as drive grocery sales growth during this holiday season.
The move is likely to contribute well to Amazon’s physical store sales as well as online store sales, which were $4.9 billion and $57.3 billion in third-quarter 2023, up 6% and 7%, respectively, year over year.
For 2023, our model projects $20.8 billion in physical store sales, indicating growth of 9.6% from 2022’s level. The same for online store sales is pegged at $228.3 billion, indicating growth of 4% from 2022.
The Prime program remains a key catalyst for AMZN’s top-line growth, backed by customer-friendly offers and cashback benefits. Its strengthening delivery and shipment services, expanding music and video content and a robust loyalty system are constantly boosting Amazon’s Prime subscriber base.
All the benefits are aiding Amazon in delivering better shopping experiences to its Prime members.
We believe the growing adoption of Prime will drive the company’s subscription revenues, which have been acting as key drivers for the e-commerce giant for the past few years.
Amazon witnessed 14% growth in its subscription services sales, which were $10.2 billion in third-quarter 2023.
Our model estimates 2023 subscription sales of $41.3 billion, indicating growth of 17.4% from 2022.
Growing momentum across subscription services is expected to continue driving the company’s overall top-line growth.
For 2023, our model estimate for net sales is pinned at $569.46 billion, indicating 10.8% growth from 2022.
We believe that the strengthening financial performance of the company will likely raise investor optimism about the stock.
Amazon has gained 64.3% on a year-to-date basis, outperforming the industry’s growth of 42.8%.
Image: Bigstock
Amazon (AMZN) to Boost Grocery Sales With New Subscription Plan
Amazon (AMZN - Free Report) is constantly making solid efforts to enhance its e-commerce offerings on the back of its Prime program. It is leaving no stone unturned to drive its Prime momentum on the back of perks, facilities and services.
This is evident from its latest trial of a grocery subscription service for Prime members, priced at $9.99 per month.
The new service is in the pilot stage, which is being tested in three U.S. cities - Denver, CO; Sacramento, CA; and Columbus, OH.
With this service, Prime members will get access to unlimited grocery deliveries from Whole Foods and Amazon Fresh on orders more than $35. They will also get unlimited 30-minute pickup on orders of any size.
Currently, Prime members pay a fee of $6.95 for Fresh orders between $50 and $100 and $9.95 for orders less than $50. They are also required to pay a $9.95 fee for Whole Foods orders.
Members will not be required to pay any of the fees with the new service. This, in turn, will likely encourage signups for the new service and boost the adoption of Prime membership.
The latest move is likely to bolster the company’s grocery retail business as well as drive grocery sales growth during this holiday season.
The move is likely to contribute well to Amazon’s physical store sales as well as online store sales, which were $4.9 billion and $57.3 billion in third-quarter 2023, up 6% and 7%, respectively, year over year.
For 2023, our model projects $20.8 billion in physical store sales, indicating growth of 9.6% from 2022’s level. The same for online store sales is pegged at $228.3 billion, indicating growth of 4% from 2022.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Prime: Key Catalyst
The Prime program remains a key catalyst for AMZN’s top-line growth, backed by customer-friendly offers and cashback benefits. Its strengthening delivery and shipment services, expanding music and video content and a robust loyalty system are constantly boosting Amazon’s Prime subscriber base.
All the benefits are aiding Amazon in delivering better shopping experiences to its Prime members.
We believe the growing adoption of Prime will drive the company’s subscription revenues, which have been acting as key drivers for the e-commerce giant for the past few years.
Amazon witnessed 14% growth in its subscription services sales, which were $10.2 billion in third-quarter 2023.
Our model estimates 2023 subscription sales of $41.3 billion, indicating growth of 17.4% from 2022.
Growing momentum across subscription services is expected to continue driving the company’s overall top-line growth.
For 2023, our model estimate for net sales is pinned at $569.46 billion, indicating 10.8% growth from 2022.
We believe that the strengthening financial performance of the company will likely raise investor optimism about the stock.
Amazon has gained 64.3% on a year-to-date basis, outperforming the industry’s growth of 42.8%.
Zacks Rank & Other Key Picks
Currently, Amazon carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the retail-wholesale sector are Expedia Group (EXPE - Free Report) , Booking Holdings (BKNG - Free Report) and Target (TGT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Expedia has gained 24.7% on a year-to-date basis. The long-term earnings growth rate for EXPE stock is currently projected at 25.3%.
Booking Holdings has gained 69.5% on a year-to-date basis. The long-term earnings growth rate for BKNG stock is currently projected at 21.6%.
Target has lost 6% on a year-to-date basis. The long-term earnings growth rate for TGT stock is currently projected at 14.18%.