Amazon.com, Inc. (NASDAQ: AMZN) kicked off its 48-hour Prime Day sale on Tuesday. Deepwater Asset Management's Gene Munster says the competition should look out.
What To Know: Amazon's Prime Day event offers Prime members exclusive access to the company's lowest prices of the year on select products. Although the stock has been moving on the ups and downs of AWS, the retail and logistics business represents three-quarters of the company's revenue, Munster said Tuesday on CNBC's "Squawk Box."
According to a recent interview with CEO Andy Jassy, Amazon's last-mile business is now bigger than the U.S. Postal Service, he said: "That's extraordinary."
Amazon has increasingly been embracing the retail opportunity by building out its Sellers by Prime and Prime Hub tools, which allow sellers on the platform to leverage Amazon's logistics. Amazon makes higher profits from those strategies, Munster said.
Amazon's retail business hasn't had sustainable profits for the last decade, but as the company ramps up its focus on logistics tools, profits are poised to expand, he said.
When Munster was asked if he was essentially saying that competitors like United Parcel Service, Inc (NYSE: UPS) and FedEx Corp (NYSE: FDX) should be on watch for increasing competition from Amazon, he said: "Exactly. That's precisely what's going on."
"I think this is a massive opportunity. The logistics piece is something that they really haven't gotten much credit for from investors and I think that ultimately is going to play a big role in terms of how investors view this business."
Amazon shares are up more than 50% year-to-date, but the stock is actually down about 15% over a three-year period. As Amazon leans further into the logistics opportunity, Munster expected investors to be rewarded.
"The takeaway here is pretty straightforward: [the] retail business is a big opportunity for Amazon and investors."
Prime Day is a huge part of Amazon's sales for the quarter. The event accounts for about 7% to 8% of the quarter's retail sales, he said, adding Apple Inc (NASDAQ: AAPL) also sees a boost around Prime Day.
Five of the top 10 deals on Amazon during Prime Day are Apple products, Munster emphasized.
AMZN Price Action: Amazon shares were up 1.33% at $128.82 at the time of writing, according to Benzinga Pro.