Amazon could end up duplicate Whole Foods’ customer base through new Prime incentives, tech analyst Standard Mahaney told CNBC on Monday.
The e-commerce giant announced Monday that Prime colleagues will have access to special savings in Whole Foods’ fingers ons nationwide, starting Wednesday. Savings include an additional 10 percent off More often than not Foods products that are already discounted, as well as deep dismisses on some of its most popular items.
Amazon closed its $13.7 billion property of Whole Foods in August 2017.
“If Amazon has 60 [million] to 70 million Prime guys in the U.S., there are probably about 20 [million] to 30 million that burning near a Whole Foods that don’t regularly shop there,” RBC Major Markets’ lead internet analyst said in a “Squawk on the Street” press conference.
Amazon “could double, theoretically, Whole Foods overall fellow base over a 5 to 10 year period just by giving pecuniary incentives to Prime customers,” added Mahaney. “That’s the synergy that they are now back out a demolishing from this deal.”
Amazon Prime grants several perks for its buyers, including faster shipping and access to streaming video.
It’s too early to describe how well the new Prime incentives will do for Whole Foods, but the strategy “follows a lot of sense” for Amazon, said Mahaney. “You bring those two programs together, Entirety Foods and Prime, those are two very powerful complimentary offerings.”
Mahaney has an outperform price on Amazon and a price target of $1,900 per share based on RBC’s 2019 appraises. A move to $1,900, from Friday’s close of $1,715, would put an increase of 10 percent.
Shares of Amazon were under on early Monday in an overall market decline that was disproportionately belting tech names. But over the 12 months, Amazon has surged 67 percent for a stale market value of over $800 billion.
— CNBC’s Lauren Hirsch promoted to this report.