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Retailers Stepping Up Delivery Plans: Is Amazon in Trouble?

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E-commerce has become an integral part of our fast-paced world, primarily due to growing proliferation of rapid delivery services.

We note that Amazon (AMZN - Free Report) , a dominant force in the e-commerce space due to its aggressive retail strategies, robust distribution strength and Prime program, continues to bolster last mile delivery initiatives to attract more customers.

The company’s same-day delivery, one-day shipping and other fast delivery services remain key catalysts in driving the top line.

However, retailers like Walmart (WMT - Free Report) , Target (TGT - Free Report) and Costco Wholesale (COST - Free Report) are making every effort to enhance e-commerce capabilities in order to capitalize on the burgeoning need for quick delivery services.

Consequently, competition is intensifying for Amazon due to growing delivery initiatives by these big retailers.

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Walmart Ups the Ante

Walmart is expanding same-day delivery service in an attempt to bolster e-commerce initiatives. This is evident from its latest move in Mexico, where it has commenced same-day delivery of certain home and tech products such as clothing irons, laptops, mobile phones and televisions. Notably, the service covers the delivery of around 12,000 different products ordered online.

Further, its extended partnership with Deliv and Parcel buyout to support same day delivery initiative remains a major positive.

Meanwhile, with regard to grocery delivery, the company’s partnership with Point Pickup, Skipcart, AxleHire and Roadie has expanded same day online grocery delivery service in metro areas across four states.

Recently, Walmart unveiled unlimited grocery delivery service called Delivery Unlimited, which has an annual subscription fee of $98. Additionally, it rolled out free one-day delivery service, which covers 220,000 items with online orders above $35.

Notably, the Zacks Rank #3 (Hold) stock has exceeded 1,100 grocery delivery locations in the United States in the last reported quarter and expects the figure to reach 1,600 by the end of fiscal 2020.

Target & Costco in Fray

Target’s huge investments to strengthen same-day delivery services are yielding strong returns. Its Shipt buyout is adding strength to same day delivery service, which was recently made accessible its own website.

Moreover, the company’s same-day in-store pickup, drive-up and Shipt have contributed 1.5 percentage points to overall comparable sales growth in the second quarter.

In the second quarter, one in five customers on an average who placed a same-day order with the company was a first-timer. Consequently, same-day delivery services are aiding the company in attracting customers.

Additionally, Target, which carries a Zacks Rank #2 (Buy), offers two-day shipment facility to deliver enhanced shopping experience.

Meanwhile, Costco offers two-day online grocery delivery across the continental U.S., and Instacart same-day delivery service across all of its U.S. locations.

Notably, Costco carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon’s Aggressive Stance

The e-commerce giant is riding on Prime momentum amid the intensifying competition. Expanding Prime enabled fast delivery services are driving growth in its retail segment.

Prime Free One Day service, which now covers over 10 million products under the categories such as beauty products, baby products, books, daily necessities and devices across the United States remains a tailwind. It helped Amazon in gaining traction among customers during the second quarter.

Further, AmazonFresh has recently been expanded to Indianapolis, Houston, Minneapolis, Phoenix and Las Vegas. Notably, this service enables Prime shoppers to combine grocery orders with Amazon bestsellers such as Amazon devices, home & kitchen, toys, health and personal care, and electronics and get them delivered at their doorsteps in two hours.

Additionally, this Zacks Rank #3 stock recently introduced two-hour delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market to additional cities of the United States namely Lexington, Little Rock, Charlottesville, Asheville, Columbia, Manchester, Savannah, Naples and Mobile.

Moreover, the company introduced an electric drone, which is capable enough to deliver packages weighing 5 pounds within half-hour.

Further, Amazon’s same-day delivery service is already available in Mexico, which boosts its international presence.

All these strong endeavors are likely to provide Amazon an edge in the delivery battle and help sustain its dominant e-commerce position.

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