Club name Amazon (AMZN) is projected to widen its status as the nation’s biggest delivery company. It gives us another reason to be confident in the firm’s retail business as the holiday online shopping season gets off to a strong start this year. According to The Wall Street Journal on Monday, Amazon beat out United Parcel Service (UPS) for the first time in 2022, shipping 5.2 billion packages. The e-commerce and cloud giant is expected to increase its lead in 2023 with internal estimates, cited by the Journal, of 5.9 billion by year-end. While Amazon passed FedEx (FDX) two years ago, the U.S. Postal Service remains the largest parcel service by volume, handling packages for its customers as well as all three delivery companies. Amazon has been reaping the benefits of huge logistics investments before, during, and after Covid. The company built out the capacity and infrastructure of mega distribution centers to reach as many people as possible, as quickly as possible. Amazon’s ongoing efforts to regionalize its fulfillment network allow for stocking items closer to their destination, which helps on cost and faster delivery times, which as a result boosts demand. On last month’s post-earnings conference call, Amazon CEO Andy Jassy stressed the importance of faster delivery times to get customers to order more things, more often. Jim Cramer on Monday praised Jassy’s foresight and Amazon’s financial commitments, saying they’ve changed buyers’ habits. “People shop every day on Amazon,” Jim added. That’s why Amazon commands more than a third of all U.S. online shopping. According to an Insider Intelligence poll, 51% of U.S. online shoppers surveyed in the third quarter said they started their product searches on Amazon. This continued shift to Amazon and other e-commerce retailers comes as more and more consumers have clearly shifted their spending habits online. According to Adobe, online Black Friday shopping increased 7.5% year over year, with consumers spending a record $9.8 billion versus $9.1 billion in 2022. A recent Mastercard SpendingPulse survey suggests total retail sales, excluding autos, increased 2.5% year over year on Black Friday, with in-store and online sales up 1.1% and 8.5% respectively. Goldman Sachs’ checks at various retail locations showed consumer traffic at physical stores “appeared muted relative to 2019.” In a Sunday research note, the analysts said there were “no lines waiting to get into stores at their openings (although traffic did build throughout the day).” One of the reasons for less consumer traffic could be a result of online promotional activity starting earlier in the week and staying consistent throughout the weekend into Cyber Monday, Goldman said. As we’ve seen throughout 2023, U.S. shoppers have been more focused on finding discounts and value as they continue to be under pressure due to lower savings, elevated inflation, and higher borrowing costs. The National Retail Federation estimates holiday 2023 sales to increase between 3% to 4% year over year to $957.3 billion to $966.6 billion in spending. Bottom line Amazon is a clear winner when it comes to value and convenience because it continues to make it easy for customers to shop online by offering deep discounts across various categories. The company’s speedy, same-day delivery service is a huge value proposition of the Prime membership — made possible, in part, by Amazon’s push to become the U.S. package delivery company in the U.S. Even before Black Friday, Amazon started holiday promotions for its Prime members early in October during its two-day exclusive Prime Big Deals Days, offering its members more opportunities for cost-saving purchases outside the traditional holiday shopping days. The e-commerce giant also offered deals throughout November. (Jim Cramer’s Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Amazon Prime logo is displayed on the side of an Amazon delivery truck in Richmond, California, June 21, 2023.
Justin Sullivan | Getty Images
Club name Amazon (AMZN) is projected to widen its status as the nation’s biggest delivery company. It gives us another reason to be confident in the firm’s retail business as the holiday online shopping season gets off to a strong start this year.
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