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Shares of US Retailers Drop Following Amazon's One-Day Delivery Announcement

The e-commerce giant's announcement on Thursday could cause other brands, manufacturers, retailers, and logistics companies to have to invest more aggressively to compete with Amazon.
Amazon Prime package | Source: Shutterstock
By
  • Reuters

NEW YORK, United States — Shares of Walmart, Target and other US retailers fell on Friday as Amazon.com unveiled a one-day delivery plan for its Prime members in a move to further disrupt the fiercely competitive retail landscape.

The e-commerce giant's announcement on Thursday could cause other brands, manufacturers, retailers, and logistics companies to have to invest more aggressively to compete with Amazon and its delivery, analysts said.

Retailers in recent years have poured billions into e-commerce and faster shipping options and are trying to close the gap with Amazon.

"This is about making it more expensive to catch up and affirms our world view that only the largest and smartest will survive," Bernstein analyst Brandon Fletcher said.

The move is expected to heighten consumer expectations on e-commerce delivery just like Amazon did with its two-day shipping option for members of its loyalty club Prime, noted analysts.

"The faster you ship, the more people buy," RBC Capital Markets analyst Mark Mahaney said.

The challenge for non-Amazon players was that very few of the existing logistics and parcel delivery players now have the ability to do nationwide one-day delivery, Morgan Stanley analyst Brian Nowak said.

"And even fewer can do it at the vast scale and reasonable cost that AMZN would need for Prime delivery," Nowak said in a note.

Walmart's shares fell about 3 percent, while Target dropped about 5 percent in morning trade.

Shares of Kohl's, Macy's and Nordstrom Inc fell about 1 percent. Grocer Kroger was nearly 3 percent lower, while consumer electronics retailer Best Buy dropped 2.1 percent.

By Soundarya J and Akanksha Rana; Editor: Maju Samuel
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