Amazon.com Inc. Prime Day is not just a big day for retail sales at the e-commerce giant, it’s also serving as a major debut for Amazon’s one-day delivery promise for Prime members.
A quarter of the U.S. plans to purchase something during the Prime Day event, according to the latest data from YouGov, which surveyed 27,422 adults.
“The big opportunity for Amazon, when it comes to Prime Day and the rollout of one-day delivery for Prime members is to reignite U.S. retail sales growth in the second half of 2019,” Tom Forte, senior research analyst at D.A. Davidson, told MarketWatch. “We are forecasting North American sales growth of 14.7% in the second half of 2019. A successful Prime Day could result in upside to our forecast.”
Prime Day will span July 15 and July 16 and is seen as the kickoff to the back-to-school shopping season. The National Retail Federation is forecasting $26.2 billion is back-to-school spending for families with children in kindergarten through grade 12. Deloitte expects $27.8 billion.
Overall, including college students, the NRF is forecasting sales of $54.5 billion.
“Free shipping remains the easiest offering for competitors to match, with the onus now on speed to the consumer,” wrote Moody’s in a Prime Day note.
and Target Corp.
“still maintain a huge advantage over Amazon from a speed-to-consumer perspective, by virtue of their store locations,” Moody’s said. “Amazon is literally throwing everything but the kitchen sink at faster delivery capability.”
Moody’s estimates that about 50% of online sales at bricks-and-mortar retailers are picked up at stores.
“This Prime Day will provide a test of the limits of Amazon’s last-mile capability,” Moody’s wrote. “Success now likely means success for the upcoming holiday season, which will improve Amazon’s competitive position with its bricks-and-mortar competitors over last-minute shoppers during this critical season.”
The competition is hoping to benefit from the Prime Day frenzy, with retailers ranging from Walmart to Costco Wholesale Corp.
to J.Crew hosting some sort of promotional event that coincides with Prime Day.
But it’s not just Prime Day that Morgan Stanley analysts think will benefit Amazon in the second half of the year.
“We raise our second half 2019 revenue estimates by ~1% as our industry conversations, AlphaWise survey data highlighting high Prime Now demand for multiple large Amazon categories (which we think will translate to 24-hour demand), and easing year-over-year comps give us incremental confidence that Amazon’s one-day shipping is leading to faster top-line growth,” analysts said.
Prime Now offers free two-hour delivery on everyday items.
Morgan Stanley rates Amazon stock overweight with a $2,300 price target.
Amazon stock has gained 11.5% over the past year while the S&P 500 index
is up 7.6% for the period.