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Amazon’s growth might mean 'game over' for competition: Analyst

With two days left before Christmas, one of the major drivers for last-minute shopping is Amazon. Thanks to the online retailer's same-day and even one-hour holiday shipping policies, procrastinating Prime members might just be able to get gifts under the tree in the nick of time.

It's this membership program (which ecompasses the speedy shipping perk) that's been fueling Amazon's accelerating gains, said Macquarie Capital analyst Ben Schachter.

"Prime is really the story for Amazon," Schachter told CNBC's "Squawk on the Street" on Wednesday. "Right now, we can confidently state that about 25 percent of all U.S. homes are already Prime. If you grow that 30 percent in '16, 20 percent in '17, and 10 percent thereafter by 2020, you get to 50 percent of U.S. homes being Prime. We think that is a game changer."

Schachter explained that the main point isn't just about free shipping for Prime members, it's about the whole suite of perks. Amazon Prime members also get access to television shows, videos, apps and even curated content for children — both benefits and content that Schachter sees expanding in the future.

In fact, by the end of this year, Macquarie estimates that Amazon also will capture 51 percent of U.S. e-commerce growth and 24 percent of retail growth.

"It's pretty extraordinary that every other company in the U.S. is really only fighting for half of e-commerce and about 75 percent of retail," said Schachter. "Amazon is truly in a league of its own and just dominating what we think is going to be continued accelerating sales."


Schachter added that Amazon's strong growth in e-commerce means bad news for other online retail and shipping outlets.

"We used to talk about what Wal-Mart might do, what Google might do. In some ways, we think it might be game over," he said. "Amazon is just building this infrastructure that is really unbeatable."

A Wal-Mart spokesperson said it's not necessarily about whose infrastructure is winning online or in stores, it's a combination of multiple channels. According to the spokesperson, the retail giant is expanding upon and leveraging its existing infrastructure to build proprietary e-commerce software and fulfillment centers while its strictly online competitor works to build brick-and-mortar retail locations.

Google did not immediately respond to CNBC's request for comment.

Earlier Wednesday, retail analyst Jan Rogers Kniffen told CNBC's "Squawk Box" that retailers should focus on this multichannel method.

"We're moving to the point where 'omnichannel retailing' is no longer going to be called 'omnichannel retailing,'" Kniffen said. "Things that aren't omnichannel retailing are going to be the oddballs."

Shares of Amazon are up more than 110 percent year to date, which Schachter said was attributable to more than just Amazon Prime.

"I think over the last year, a lot of it has been Amazon Web Services. That's really been one of the key drivers for most institutional investors," he said.

However, Schachter added, "Over the course of the year, the retail business remains underappreciated in terms of what Prime growth is going to be … we think 2016 will be more focused on the retail side."

Amazon stock was up modestly to $664.01 midafternoon Wednesday; Macquarie has a 12-month price target of $760 for the stock.

— CNBC's Fred Imbert contributed to this story.