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Amazon Is Gaining in Deliveries at the Post Office's Expense, Analyst Says -- Barrons.com
7/9/19, 12:16 PM
Amazon Prime members can receive some package in one day instead of two, and a broader rollout is on the way.
That's good news for Amazon.com (ticker: AMZN), but not for the U.S. Postal Service, one analyst says. "We expect Amazon's move to Prime 1-day delivery will drive higher conversion rates, leading to accelerating unit growth in the second half of 2019 and into 2020," wrote Cowen analyst John Blackledge in a note on Monday.
He expects Amazon to be one of a number of third-party distributors that will continue to take a significant share of the U.S. market for "last mile" deliveries, those that bring a package to its final destination, typically someone's residence.
Amazon's additional market share -- and gains in merchandise sales and revenue -- will come largely at the expense of the U.S. Postal Service, Blackledge said.
Growth in the volume of parcels delivered by the post office dropped from 21% in 2016 to 6% in 2018. There was a 5% year-over-year decline in the first quarter of 2019, according to post-office figures the analyst cited.
The decline comes as Amazon ramps up some of its faster shipping programs and shifts to other options for last-mile deliveries. Blackledge estimates that the share of Amazon's last-mile deliveries handled by the postal service will drop from about 54% in 2018 to about 35% in 2024. His previous estimate was for a share of 45% in 2024.
The postal service didn't immediately respond to a request for comment.
Other players, such as DHL International, and Amazon affiliates including its Uber-like in-house program Amazon Flex, and its Delivery Service Partner program, are picking up that market share.
Cowen estimates that these other distributors combined will account for 23% of Amazon's delivery volume in 2019. The total will rise to 43% by 2024, Cowen predicted.
Blackledge maintained a Outperform rating on the stock and a price target of $2,500.
Amazon stock was up 0.8% to $1968 on Tuesday morning.
Write to Sophia Cai at Sophia.Cai@barrons.com
(END) Dow Jones Newswires
07-09-19 1216ET
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