Amazon could match Walmart in terms of U.S. sales in two to three years time if JPMorgan’s prediction proves true. According to a report in CNBC, citing JPMorgan, Amazon’s gross merchandise volume in the U.S. is on track to match Walmart's net sales in the U.S. by 2020 or 2021.
Analyst Christopher Horvers wrote to clients, "Amazon is the second-largest U.S. retailer and fastest growing at scale. We believe key drivers of Amazon's share gains include the Prime ecosystem, endless aisle driven by third-party seller expansion, outsized growth in large, underpenetrated categories, and removing friction and moving closer to customers."
Currently, Walmart is the leader in terms of sale with a revenue of almost $496 billion. In the U.S. alone, it had an annual revenue of $318.5 billion for the fiscal year ended in January. The way JPMorgan sees it, Amazon's Prime membership program — now at more than 100 million members — should hit 140 million members in 2019. Amazon is raising the price to $119 a year from $99, which Wall Street likes because it can prop up its revenue.
"Prime delivers such massive scale and features that we believe it would be very difficult for any company to replicate," Horvers said. "The company offers same-day free shipping on more than a million items for Prime members when ordered before noon in 8,000 cities and towns. Prime Now goes a step further and guarantees two-hour delivery on tens of thousands of items in 32 U.S. cities."
As for its high-flying stock, JPMorgan said Amazon is still in market-share accumulation mode, which will bode well for the stock that the Wall Street firm rates an overweight. The analyst said its market share from eCommerce should be 50 percent, up from 41 percent of sales, during the next few years.