Amazon is building more than 1,000 same-day fulfillment centers under an internal plan called Project Mercury, and Bank of America says the goal is to close Walmart's long-standing proximity advantage. The bank estimates the buildout costs $6.8 billion and calls it "manageable," projecting the network turns cash-flow positive by 2030.
Bank of America says Amazon's plan for more than 1,000 same-day fulfillment centers is fundamentally an attempt to close Walmart's long-held proximity advantage. Analyst Justin Post laid out the thesis in a research note.
Business Insider had reported that Amazon is considering an internal project called Mercury, which would expand its same-day fulfillment network from roughly 85 facilities today to more than 1,000 by 2031. The goal is to place inventory within 10 miles of about 80% of Prime members in the US, according to internal planning documents.
A narrower, faster network
Post said Project Mercury's strategy is less about expanding selection than making a smaller set of high-demand products more immediately accessible. He wrote that Amazon's ability to compete with same-day delivery holds strategic importance for the company.
According to Justin Post: "a denser, faster, and increasingly automated countrywide fulfillment network". The bank called the project's estimated $6.8 billion investment "manageable" for Amazon.
Internal projections reviewed by Business Insider forecast that Mercury would turn cash-flow positive by 2030 and generate $7.1 billion in economic value over 10 years. Amazon's same-day sites carry a narrower assortment — roughly 90,000 fast-moving products such as paper towels, cough medicine, and fresh food — rather than the broad selection of a conventional fulfillment center.
Walmart's head start
Walmart has a major head start. Its roughly 5,000 stores put fast delivery within 10 miles of 90% of the US population, and the retailer has increasingly used those stores as local fulfillment centers. That footprint helps Walmart deliver 70% of e-commerce orders the same day.
Bank of America's note also cited an earlier Business Insider report on Project Tetromino, Amazon's automated delivery-station initiative. The bank said the combination of network density, faster delivery, and automation could extend Amazon's retail margin improvement cycle for multiple years.
Source: Business Insider
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