Amazon's 1-Day Delivery Could Add Incremental $2 Billion in '19, Says Cowen

Amazon’s move to one-day delivery, an extra perk announced for Prime members in April (see 1904260026), will drive higher conversion rates, leading to faster unit growth in second-half 2019 and into next year, Cowen & Co. analyst John Blackledge wrote investors Monday. Higher purchase conversions could result in $1.1 billion-$2 billion incremental U.S. revenue this year, said Cowen, based on survey data saying 32 percent of U.S. Prime households abandon their shopping carts because products won’t be delivered in a timely fashion: “With the move to Prime 1-Day and AMZN’s general push for faster delivery speeds, it could eliminate this friction point and raise conversion rates.” Cowen’s latest forecast implies Amazon has a 31 percent share of U.S. e-commerce this year, expected to rise to 35 percent in 2024, accounting for 3.6 percent of U.S. retail sales in 2019, rising to 6 percent by 2024. Cowen expects the U.S. Postal Service's share of Amazon’s last-mile delivery to drop from an estimated 54 percent in 2018 to 35 percent in 2024 as Amazon ramps faster delivery programs. Blackledge believes a combination of third-party logistics companies, Amazon Flex, Amazon’s Delivery Service Partner program and DHL will “pick up the changing last mile delivery mix,” getting 23 percent of last-mile delivery this year, rising to 43 percent by 2024. Amazon “wants to control more of its shipping” and drive faster delivery options for Prime subscribers, he said, while independent third-party logistics companies can handle faster delivery options than USPS, though costlier, and FedEx "doesn’t intend to scale" with Amazon’s expected volume growth (see 1906070053).