Amazon's Strategy for Beating Rivals This Holiday Season

The gloves are off. Amazon.com's (NASDAQ: AMZN  ) shipping service just got more convenient, which could position it as the top shopping destination this holiday season. The e-tailer's latest strategy: Sunday delivery. That's right; Amazon is teaming up with the U.S. Postal Service to offer customers delivery service on the first day of the week. 

Sunday fun day
Starting this week, customers in New York and Los Angeles can receive packages on Sunday, just in time for the all-important holiday shopping season. Amazon plans to expand the program to other U.S. cities including Dallas, Houston, and New Orleans  as soon as next year.

In an Amazon press release, Postmaster General Patrick Donahoe said of the deal, "As online shopping continues to increase, the Postal Service is very happy to offer shippers like Amazon the option of having packages delivered on Sunday." And why shouldn't it be? The deal comes at a desperate time for the USPS, which is on track to lose as much as $6 billion this year. While specific terms of the partnership were not disclosed, the Postal Service has a lot to gain from this, especially as the service is rolled out to additional cities and more customers.

Sunday delivery will be available to all Amazon.com shoppers. However, the service is free for Amazon Prime members, who pay an annual fee of $79 in exchange for free two-day shipping, as well as unlimited access to Amazon's streaming video service. For other customers, Amazon offers free shipping on orders of $35 or more, which is still better than most retailers. Target  (NYSE: TGT  )  shoppers, for example, must reach a minimum purchase value of $50 to qualify for free shipping on Target.com.

Adding Sunday delivery gives Amazon another advantage over brick-and-mortar retailers. Consider this: One of the benefits of shopping in-store at Target versus online is that you get your purchases when you want them. However, with Amazon now able to make deliveries every day of the week, a big part of that advantage goes away.

Delivery on-demand
This isn't Amazon's first attempt to use delivery options to its advantage ahead of the holiday shopping season. The e-commerce giant is also promoting same-day delivery in 11 cities, with more on the way. However, Amazon isn't without competition. Last month, eBay (NASDAQ: EBAY  ) expanded its eBay Now delivery program to include Chicago, London, and Dallas in addition to New York and San Francisco.

Customers in participating cities can make purchases on eBay.com and pay a courier charge of $5 to have their product delivered that day. While eBay doesn't plan on making money from this service, it hopes to attract more customers by offering fast and convenient delivery.

With the holidays fast approaching, it isn't enough that retailers offer free shipping. This year, convenience will be a big draw for shoppers. By adding an extra delivery day, Amazon is giving consumers another compelling reason to shop online at Amazon.com.

Online retailers like Amazon are changing the way consumers spend money, both online and in stores. As a result, the rules for investing in retail stocks have changed. 

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