Amazon (AMZN) Gains as Prime Now Shows 'Impressive' Early Adoption

March 1, 2016 10:15 AM EST
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Amazon (NASDAQ: AMZN) is solidly higher Tuesday after Cowen analyst John Blackledge published a survey showing strong early adoption of the company's Prime Now service.

Launching in December 2014 and available now in 24 US markets accounting for 48% of US GDP, Prime Now offers 1 hour delivery (~$8 fee per delivery) and free 2-hour delivery for Prime members on over 10,000 items, including goods from local merchants, mostly local grocers, which increases the product selection.

The firm surveyed 1,250 US persons 18+ and found that 25% of US Prime subs purchased goods on Prime Now in Jan '16. They called this "extremely impressive early penetration of our estimated 40MM+ US Prime subs."

The survey also found high engagement. 24% of respondents purchased goods weekly on Prime Now while 70% of respondents purchased goods on Prime Now multiple times per month.

In terms of age demo's, P25-44 accounted for 66% of all Prime Now purchasers, the analyst noted. Roughly 33% of respondents in the P18-34 demo purchased goods from a local grocery store on Prime Now, above the P35-54 demo at 25% and the P55+ demo at 6%.

In terms of shopping categories, Media (60%), Electronics <$50 (47%), Personal Care (44%), Apparel/Shoes/Accessories (41%), Electronics >$50 (38%), Household Products (27%), Toys (26%), and Groceries (22%) were leading categories. On average, Prime Now users purchased 4 categories on average in Jan '16.

The firm views Prime Now as a threat for local stores, particularly for high-replenishment goods.

Cowen maintained an Outperform rating and $750 price target on AMZN.

For an analyst ratings summary and ratings history on click here. For more ratings news on click here.

Shares of closed at $552.52 yesterday.

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