Forget one-day shipping: same-day is the 'real battleground' where Amazon, Walmart, and Target, are sparring

Amazon said Friday that it would shorten its two-day Prime shipping promise to one day. Walmart and Target shares were hammered as Wall Street analysts hailed the move as a “game-changing” coup.But Walmart and Target already have a “huge advantage” over Amazon when it comes to shipping and pickup options, thanks to their thousands of brick-and-mortar stores, according to John Zolidis, president of Quo Vadis Capital.Walmart CEO Doug McMillon told Zolidis in October that same-day shipping, not one-day shipping, is the “real battleground” for Walmart and its competitors. Visit Business Insider's homepage for more stories.Shares of Walmart and Target were hammered on Friday after Amazon announced it would shorten its Prime shipping promise from two days to one day. Wall Street analysts hailed the move as a “game-changing” coup, saying it would force competitors to ramp up spending to match Amazon's one-day offer. But concerns about the impact to Walmart and Target, in particular, are overblown, according to John Zolidis, president of Quo Vadis Capital. Shares of Walmart and Target were down more than 2% and 5%, respectively, in mid-day trading Friday.“Everyone that follows Amazon is jumping up and down about how exciting this is,” Zolidis told Business Insider. “But this was not unexpected.”Same-day shipping, not one-day shipping, is the “real battleground” for retailers, and Walmart and Target are well positioned to win that war, he said. In conversations last October with Walmart CEO Doug McMillon, McMillon characterized same-day shipping as the “final frontier” that “everyone is racing to develop,” Zolidis said. Walmart did not immediately respond to a request for comment on this story.When it comes to same-day shipping and pickup, Walmart and Target have a “huge advantage” over Amazon because of their thousands of stores, which give both companies quick and efficient access to most of the US population. Amazon's one-day shipping move “ratchets up the pressure on retailers across the spectrum to offer faster shipping,” Zolidis said. “But both Walmart and Target are leading Amazon in terms of these shipping options — they are the ones with the best solutions already in place.”Walmart rolled out free two-day shipping for millions of items two years ago. Unlike Amazon's Prime membership, which costs $119 annually, there are no fees, though orders must total a minimum of $35 to qualify. Read more: Walmart just undercut Amazon's most valuable perkWalmart also offers same-day grocery delivery to more than 40% of the US population and pickup at 2,100 of its more than 4,000 US stores. The company has installed automated Pickup Towers in more than 700 stores for same-day pickup of non-grocery online orders. Target, meanwhile, offers same-day delivery through a $99 Shipt subscription, and it will offer drive-up pickup options at most of its nearly 2,000 stores by the end of the year. The drive-up service allows customers to pick up items they ordered online without exiting their vehicles.By comparison, Amazon offers same-day delivery to members of its Prime program through Prime Now, and grocery pickup and delivery in as little as one hour from hundreds of Whole Foods stores.Read more: Walmart and Kroger are rethinking stores as the online grocery battle intensifiesWhile Amazon's latest move might not choke Walmart and Target, there's no denying that the new offer will elevate its Prime membership offering and put pressure on department stores and specialty retailers.The faster shipping promise is expected to make the membership's $119 annual cost more valuable to non-members — and stickier for current members. “This IS Big News, if you believe in Shipping Elasticity, which we do,” RBC Capital Markets analyst Mark Mahaney wrote in a research note. “The faster you ship, the more people buy ... This could be a key growth catalyst for Amazon for some time.”