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Prime Now Seen Helping Amazon Gain Vs. Retailers Wal-Mart, Target

With the Amazon.com ( AMZN ) one-hour delivery app Prime Now , it’s possible to order a big-screen television on New Year’s day from a mobile phone and still catch that day’s football bowl games. This capability is going to help Amazon destroy the advantage that Wal-Mart ( WMT ), Target ( TGT ) and others hope to gain by offering online orders, in-store pickup and stores as warehouses for online deliveries, according to a Wells Fargo analyst. Though ordering a TV from a smartphone and having it delivered immediately is not a typical use of Prime Now, Amazon’s app has caught on with consumers. The Seattle-based giant has brought the service to 26 markets in just over a year. It’s part of the company’s move to dominate “Need It Now” shopping, Wells Fargo analyst Matt Nemer wrote in a research note late Monday. Prime Now members must be members of the company’s Amazon Prime loyalty program, which costs $99 a year. Amazon Prime includes free two-day shipping, free video streaming and a host of other perks. Those perks include Prime Now, which offers free two-hour shipping of roughly 30,000 products in markets where it’s available, and one-hour shipping for $7.99 per delivery. Amazon’s push may eliminate a key advantage of physical retailers — the last-mile convenience of being able to get something immediately. As that advantage disappears, so do other advantages touted by brick-and-mortar stores, such as the ability to pick up an online order quickly at your local store. Prime Now is gaining even in food delivery, Nemer says. He says that Prime Now has a better app for Apple ( AAPL ) iOS users than Google Express, the Alphabet ( GOOGL ) food delivery service. Wal-Mart, Target and other retailers have struggled to compete with Amazon’s growth rate and innovation — especially around customer loyalty programs. Target recently launched its Red Card loyalty program. Amazon stock was up nearly 1%, near 567, in afternoon trading on the stock market today. In the research note, Nemer says that Prime Now, though not currently profitable, helps Amazon retain Prime member loyalty and will, with scale, become profitable. Prime also gives the company opportunities to experiment — for example, selling products in smaller pack sizes or offering high-turnaround fresh groceries that would be impossible to sell on Amazon.com. Nemer says that Amazon’s delivery of local food items “suggests” that it may compete with food-delivery platforms like GrubHub ( GRUB ) and privately held Uber’s UberEats. It’s also possible, Nemer says, that Amazon could begin to eat into convenience store market share. If Amazon can deliver small-pack sizes for lower prices with free delivery, convenience stores could have trouble competing, he says.

Facebook, Alphabet To Benefit As Digital Ads Overtake TV In 2017

EMarketer expects 2017 to be a watershed year for U.S. digital ad spending. The research firm says that in that year, digital will overtake spending on TV ads for the first time. Digital ad leaders Facebook ( FB ), Alphabet ( GOOGL ) subsidiary Google and Yahoo ( YHOO ) are poised to benefit. In 2016, total digital ad spending is expected to reach 35.8% of all U.S. ad spending, trailing TV ad spending’s 36.8% share, eMarketer said. But next year, digital ad spending will rise to 38.4% of total U.S. ad spending, some $77.37 billion, while TV ad spending will comprise 35.8% of total media ad spending, or $72.01 billion, says eMarketer. “We still expect positive growth for TV ad spend, driven by political advertising and the summer Olympics,” said eMarketer senior forecasting analyst Martin Utreras. “However, we see more ad dollars flowing to digital as a way of optimizing spending in what may be a challenging economic year.” Mobile is continuing to drive growth within overall digital ad spending. Mobile ad spending in the U.S. will rise 38% this year to $43.6 billion, according to the eMarketer report. Mobile will represent 63.4% of total digital ad spending in the U.S. this year, it says. “As consumers continue to increase engagement with mobile devices for daily activities and content consumption, marketers will further integrate all marketing activities — including advertising — to the mobile category,” said Utreras. Video will also gain, with spending on digital video advertising expected to rise 19% to $11.72 billion in 2017 and another 14%, to $13.39 billion, in 2018, eMarketer said. This year, market leader Google is expected to win 38.7% of all digital ad spending in the U.S., eMarketer said. Facebook will come in at No. 2 with a 15% share, while Microsoft ( MSFT ) will control 3.8% of the market. Yahoo will have 3.4% of digital ad spending this year, while Twitter ( TWTR ) will hold 2.4%, according to eMarketer. Among ad buyers committed to start buying advertising on social media sites, eMarketer said that 22% will begin advertising on Snapchat for the first time this year. eMarketer added that 12% planned to start advertising on Pinterest or Facebook’s Instagram, while 10% of respondents planned to begin advertising on Yahoo-owned Tumblr. In January, investment bank Cowen & Co. said that it expects U.S. digital advertising to overtake spending on TV advertising in 2016, a full year ahead of its prior forecast. It based its forecast on its survey of 50 senior U.S. ad buyers. Image provided by Shutterstock .

Box Seen Narrowing Fiscal Q4 Loss But Remains Deeply In Red

Box ( BOX ), the cloud storage firm whose stock has disappointed since its IPO in January 2015, is expected to remain far from profitability but to narrow its losses, when it reports its fiscal Q4 results after the close Wednesday. Analysts polled by Thomson Reuters expect revenue for the period ended Jan. 30 to soar 31% to $81.8 million, with Box’s per-share loss minus items easing to 29 cents from 37 cents in the year-earlier period. Shares of the online data storage and file-sharing service provider are down more than 10% in 2016, though they traded 0.4% higher midday in the stock market today , near 12.60, and are up nearly 40% since touching an all-time low of 8.96 on Feb. 9. Box has a relatively low IBD Composite Rating of 23. The company is part of IBD’s Internet-Network Solutions group, which ranks No. 120 out of 197 industry groups. Gigamon ( GIMO ) leads the group with a Composite Rating of 89. Box said it had 54,000 paying customers as of Oct. 31, up from 50,000 in the July quarter. Box also says that its paying business customers include 55% of the Fortune 500. Box competes with Microsoft ( MSFT ), Google owner Alphabet ( GOOGL ), startup Dropbox and Amazon.com ‘s ( AMZN ) cloud-based “Zocalo” enterprise document storage service. Under its freemium business model, Box also provides consumers with free personal data storage accounts. Box says that it had 41 million total users as of Oct. 31.