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UPDATE 2-Amazon launching same-day U.S. delivery service

* Same-day service available in 7 major U.S. cities

* Launch is an effort to win last-minute holiday sales

* Will expand same-day delivery in coming months (Adds details on scope of delivery service)

SAN FRANCISCO, Oct 15 (Reuters) - Amazon.com Inc AMZN.O said on Thursday it was launching same-day delivery service in seven cities as the online retailer looks to win sales from last-minute shoppers this holiday season.

Amazon said “Local Express Delivery” will offer customers same-day delivery in New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington, D.C. for $5.99.

That price applies only to Amazon Prime members, who pay a $79 yearly fee for free shipping from the online site. For a non-Prime customer, the price could be as high as $18.99 to ship a computer or a piece of luggage, for example.

The service will be extended to Chicago, Indianapolis and Phoenix in the coming months, Amazon said. It will be a permanent service from the retailer that will continue after the holidays.

“If a customer needs a last-minute present for a birthday or wants a copy of their book club book before the weekend starts, they can order from Amazon instead of the hassle of a last-minute trip to the mall,” Girish Lakshman, Amazon’s vice president of transportation, said in a statement.

The company will use the courier services Dynamex Inc DDMX.O and A1 for its same-day needs, Amazon said.

Ed Weller, an analyst with ThinkEquity, said the new service “removes yet another barrier to closing the sale” for Amazon, which has outpaced rivals in the difficult spending environment.

“It will surely contribute something incremental to sales, especially around holidays,” wrote Weller in a note, adding that the $5.99 price for Amazon Prime members seems intended to drive membership to that yearly service.

Amazon is also expanding its Saturday delivery options. Items ordered before the cut-off time on Thursday using two-day shipping will be delivered on Saturday instead of Monday. Amazon Prime members will pay $6.99 for the service, with an additional cost for non-Prime members.

The Seattle-based online retailer reports third-quarter results next week.

Shares of the company were down 1.6 percent at $95.90 in early afternoon trading. (Reporting by Nicole Maestri and Alexandria Sage, editing by Maureen Bavdek and Gunna Dickson)

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