Target, Walmart Shares Take Hit After Amazon's Move to One-Day Shipping
April 26 2019 - 4:58PM
Dow Jones News
By Khadeeja Safdar
Shares of Target Corp. and Walmart Inc. dipped the day after
Amazon.com Inc. said its Prime members would be getting free
one-day delivery instead of its current two-day offer.
Target shares were down 5.65%, to $77.12, and Walmart shares
declined 1.92%, to $101.53, on Friday. Both retailers offer free
two-day shipping on orders $35 and up, as well as an array of other
delivery and pickup options.
Amazon said Thursday the $800 million move to one-day shipping
would add products and ZIP Codes throughout the world, but the
company didn't specify when the policy would be implemented.
"It's a significant step, and it will take us time to achieve,
and we want to ensure we have good delivery experience for our
customers as we evolve this offer," said Brian Olsavsky, Amazon's
chief financial officer.
Amazon shares inched up 2.54% on Friday.
The most profitable shoppers for bricks-and-mortar retailers are
usually the ones who make purchases in stores, but that is no
longer the preferred option for many people. Across the U.S.,
online shopping accounted for 9.7% of total retail sales last year
and grew 14.2% from the previous year, according to the Commerce
Department.
Last year, Amazon boosted its Prime membership cost to $119 a
year, an increase of $20 to reflect the program's rising costs and
expanded options.
Walmart and Target have invested heavily in their supply chains
to offer faster shipping options, but they have also emphasized
ways for shoppers to pick up orders in stores to defray shipping
costs. Sales have increased at both retailers thanks to investments
in stores and digital capabilities.
A spokesman for Target said Friday the Minneapolis-based
retailer offers shoppers "numerous ways to shop same-day and
receive their purchases within hours," including options to pick up
orders at stores, which don't require a membership.
Walmart didn't immediately respond to a request for comment.
After Amazon's announcement, retailers are likely to make more
investments that could impact profits, said Alice Fournier, an
e-commerce analyst at Kantar. "Considering how quickly free two-day
shipping became a baseline expectation in e-commerce, investors now
see the possibility that free one-day shipping follows a similar
trajectory."
Some analysts said large retailers won't have much difficulty
competing. In a research note on Friday, John Zolidis, president of
Quo Vadis Capital, said it would be a mistake for investors to sell
shares of large retailers such as Target and Walmart on Amazon's
announcement.
"They have anticipated this for some time and are already
rolling-out corresponding services," he said. "The losers here are
going to be retailers that are already behind the curve and don't
have the financial strength to make the investments to develop
these capabilities."
Chris Wack contributed to this article.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
April 26, 2019 16:43 ET (20:43 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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