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Amazon's Best-in-Category Fast Delivery Gives It Advantage Over WMT and TGT: Jefferies

The Seattle online giant offers the service for considerably more products, Jefferies analyst Brent Thill argues.
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Last-minute holiday-season shopping has never been simpler now that numerous one-day-delivery services have emerged, but Amazon  (AMZN) - Get Inc. Report is still the lead dog in the category, a Tuesday note from Jefferies argues.

The firm tested the availability of the one-day -- or faster -- delivery services offered by Amazon  (AMZN) - Get Inc. Report, Walmart  (WMT) - Get Walmart Inc. Report and Target  (TGT) - Get Target Corporation Report. And it found that the Seattle online giant “on average offered expedited delivery for meaningfully more products.”

Amazon has been beefing up its one-day-shipping options. It began offering them to Prime members in April, along with plans to invest $3 billion on the initiative in the fourth quarter. 

That investment will result in higher volume and more delivery stations over time. And that in turn will increase utilization and cut costs by reducing the company's reliance on air freight and third-party carriers.

“More importantly, we see one-day benefiting [the] top line by increasing conversion on products requiring immediacy, growing car size and improving usefulness," analyst Brent Thill wrote. 

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"This also reduces the frequency [at which] consumers leave AMZN, increasing engagement and share of wallet. ..."

Jefferies also notes that consumers have six fewer shopping days between Black Friday and Christmas Eve this year, making fast delivery an even more critical differentiator among the retailers.

Amazon's "breadth of expedited delivery offerings is significantly more comprehensive than that of its largest competitors, positioning the company to capture [an] outsize share of holiday spending,” Thill wrote.

Amazon offers one-day or same-day delivery to Prime members on 10 million items, compared with 65,000 for Target and 220,000 for Walmart.

Thill rates Amazon stock buy with a price target of $2,180. At last check the shares were little changed at $1,754.