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Amazon's US sales to match Walmart's within three years, JP Morgan predicts

Amazon's e-commerce empire is on track to match Walmart sales domestically within the next two to three years, according to J.P. Morgan.

According to the bank's analysis, Amazon's U.S. gross merchandise volume (GMV) — a key industry metric measuring total dollar value of merchandise sold online — is set to match Walmart's net U.S. sales by 2020 or 2021.

"Amazon is the second-largest U.S. retailer and fastest growing at scale," analyst Christopher Horvers wrote Monday. "We believe key drivers of Amazon's share gains include: the Prime ecosystem; endless aisle driven by third-party seller expansion; outsized growth in large, underpenetrated categories; and removing friction and moving closer to customers."

Though Walmart remains king of sales with $495.8 billion in annual revenue and U.S. sales of $318.5 billion (a 3.5 percent increase year over year) for the fiscal year ended in January, Amazon is growing at a faster pace in the United States.

Jeff Bezos' company boosted GMV from $141 billion in 2016 to $186 billion in 2017, a 31 percent increase year over year.

In its first comments on the exact size of its membership program, Amazon recently revealed that it boasts more than 100 million as the e-commerce giant explores areas outside its traditional consumer goods environment. J.P. Morgan expects this number to hit roughly 140 million in 2019.

The company recently announced that it would raise prices for its premium membership to $119 from $99, a move Wall Street applauded as beneficial to its revenue base.

"Prime delivers such massive scale and features that we believe it would be very difficult for any company to replicate," Horvers added. "The company offers same-day free shipping on more than a million items for Prime members when ordered before noon in 8,000 cities and towns. Prime Now goes a step further and guarantees two-hour delivery on tens of thousands of items in 32 U.S. cities."

While the price increases are pushing Amazon's stock even higher, Horvers noted that the company is still accruing market share, predicting that it will jump to 50 percent of e-commerce sales from 41 percent of sales over the next few years. J.P. Morgan has an overweight rating on Amazon shares.

Amazon's stock is up 37 percent so far this year, well ahead of the S&P 500's 2.1 percent gain over the same period; the stock is up 66 percent over the last 12 months.