During Amazon quarterly earnings’ conference call last week, Brian Olsavsky, the chief financial officer said they are evolving their Prime free two-day shipping program to be a free one-day shipping program. The news sent shock waves through the retail space after the announcement. However, this was ultimately Amazon’s plan from day one, well not exactly day one. Over the years, Amazon has ignored Wall Street and continued spending money building fulfillment centers. In 2005, there were about 12 fulfillment centers. Today there are over 100 fulfillment centers.
To support the goal of one day shipping, Amazon started taking the logistics of moving packages from the fulfillment centers to your home by leasing/buying planes, trucks and vans.
Amazon’s goal is when you run out of toothpaste or toilet paper, instead of running to the store, order it (and maybe you will see some other things you need) and you will have it the next day. The goal of one day shipping is a competitive advantage many can’t match…unless you are Walmart.
After Amazon made the announcement of moving to one day shipping, Walmart twitted the following:
Walmart shouldn’t experience any difficulties in matching Amazon’s one-day shipping, Bloomberg quoted Sanford Bernstein Brandon Fletcher as saying in a research report. The analyst said one-day shipping is “neither shocking nor difficult” for Walmart given its large scale.
Fletcher has first-hand experience having worked in Walmart’s strategy and operations department, Bloomberg said. Walmart boasts 156 distribution centers and upgrading its facilities to allow one-day shipping shouldn’t require heavy investment.
So where is Walmart’s stock price heading next, lets go to the chart? The chart suggest price is going to test the daily demand at $107.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.