Amazon Will Make Up 50% of All U.S. E-Commerce by 2021

Apr 10, 2017

Brick-and-mortar retailers should expect no relief from Amazon.com's (amzn) relentless march to e-commerce dominance.

The online retailer, which accounts for about 34% of U.S. online sales, should see that market share grow to about 50% by 2021, helped how the popularity of its Prime membership program and its marketplaces, Wall Street firm Needham said in a research note on Monday. The firm upgraded its rating on the stock to buy from hold and set a price target of $1,100 on the already soaring shares.

"We believe Amazon's established dominance in the U.S. is sustainable with Prime, mobile penetration and third-party growth," Needham analyst Kerry Rice wrote in the note.

While traditional retailers are enjoying strong online growth- Kohl's (kss), J.C. Penney (jcp) and Target (tgt) enjoyed record internet sales during the holidays, Amazon is still outpacing the overall industry's growth, extending its lead over rivals. Walmart (wmt) has made large strides in the last year thanks to an overhaul of its third-party sellers and its purchase of jet.com, but its sales remain a fraction of Amazon's.

Amazon's not-so-secret weapon is Prime, which offers subscribers free two-day shipping for a $99/year fee, along with entertainment like television shows and streaming music. Research firm Consumer Intelligence Research Partners estimates Amazon had some 65 million Prime members last year, more than double the number two years earlier. And those shoppers are more active and loyal as they try to make the most of the investment: Needham cited data from eMarketer that found 80% of Prime members shopped on amazon.com at least once a month. CIRP found Prime members spend up to $1,500 a year on the site, more than twice non-members.

And Amazon's highly popular shopping app well help it make the most of the accelerating shift of online sales from desktop to smartphone. (Walmart has been adding many features to its own app to get people to use it more in the hopes it becomes their default shopping app, much as Amazon's is for millions of customers.) Digital sales will grow to 13% of all retail spending in 2012, up from 8% now, meaning the Amazon runaway train will only get harder to catch.

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions