Amazon Aims to Outmaneuver Walmart's Delivery Dominance
Amazon.com Inc. (NASDAQ:AMZN) is gearing up to expand its same-day delivery network, aiming to challenge Walmart's key advantage in the space. Bank of America analyst Justin Post reiterated a Buy rating on Amazon with a $320 price forecast, citing the company's proposed Project Mercury as a major driver of growth.
Post said that Amazon is considering expanding its Sub Same-Day fulfillment network to over 1,000 facilities by 2031 from the current 85. These facilities would stock around 90,000 of Amazon's fastest-selling products, including household essentials, Fresh items, and medicines.
The proposed expansion could help Amazon challenge Walmart's proximity advantage, which uses about 5,000 stores to support rapid fulfillment. Post estimates that the project could generate $7.1 billion in economic value over 10 years, with a three-year investment of $6.8 billion. However, he notes that the direct financial returns from Mercury appear modest.
Post views the project as strategically important, representing less than 5% of Bank of America's estimated annual Amazon retail capital spending. The analyst also expects Amazon's denser fulfillment network and continued automation to support retail margin improvement for several years.