) has announced the expansion of its same-day delivery service to
six cities. These include Baltimore, Dallas, Indianapolis, New York
City, Philadelphia and Washington DC.
Amazon introduced this service in 2009 and recently expanded it
to Dallas and San Francisco. The service allows customers to order
items any day of the week, latest by noon, and receive the
deliveries at their home on the same day. This service is
applicable for millions of items including popular movies, video
games, travel needs, school supplies and day-to-day household
Prime members can avail the service for $5.99 which will cover
all the items in a single order. However, the service is expensive
for non-subscribers who need to pay $9.98 for the first item and 99
cents for each additional order.
This is the latest effort by the company to expand its
operational activities (shopping) and increase delivery options. In
May 2014, Amazon and Twitter (
) sealed a deal to enable Twitter users to shop directly from
Amazon's e-Commerce portal. In the same month, Amazon announced the
expansion of its Sunday package delivery service to nearly 15
cities. In 2013, Amazon expanded its Prime Pantry, a grocery
delivery service, to Los Angeles and San Francisco.
We believe the company's ever-expanding content portfolio will
attract more subscribers, thereby expanding the company's revenue
Online shopping has changed the shopping scenario. Customers
visit retail shops to physically check the products but they
finally purchase it online to avail attractive discounts.
Therefore, prompt and accurate delivery of products is essential
for any company to succeed in the e-Commerce world.
With a view to make this expansion a success, Amazon has already
started investing in warehouses.
However, the same-day delivery field is getting more crowded by
the day. Increasing competition from eBay (
), Google (
) and other online retailers remain a matter of concern. In June,
Google expanded its same-day delivery service into rural areas to
gain a competitive advantage. Also, uncertainty regarding its
investment plans and the probability of continuing losses in the
near term compels us to be cautious regarding the shares.
Amazon shares currently carry a Zacks Rank #4 (Sell).
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