Amazon.com Inc. AMZN has announced plans to open its first fulfillment center in Bessemer, AL in order to meet the growing demand in the online shopping space. The company currently operates a sortation center in Mobile, AL.
Since the last few years, the company has been spending heavily on its new fulfillment centers. Fulfillment centers are giant warehouses that help online retailers store and ship products, and handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.
Over the past year, the company has outperformed the industry it belongs to. Shares of Amazon have gained 67.49% compared with the industry’s growth of 37.39%.
New Amazon Fulfillment Center
According to Amazon, the new facility, spanning 855,000 square foot, will create more than 1,500 full-time jobs. The center will primarily focus on small items such as books, household commodities and toys.
The new facility is expected to be one of Amazon’s newest-generation fulfillment centers wherein robots, vision systems and other high-end technologies will be used to speed up order deliveries.
Amazon stated that it pays competitive wages, and provides healthcare and other full-time benefits. In addition, the company offers programs like Career Choice to help employees pursue courses related to fields that are in demand. The online giant also provides other benefits like generous maternity and parental leaves.
Our Take
The world’s largest online retailer has been strengthening its presence all over the world. To date, Amazon has created millions of full-time jobs and continues to hire manpower to meet growing customer demand.
In our view, Amazon must maintain its U.S. market share while expanding globally to retain its leading position. To this end, the company needs to invest more in fulfillment, as well as technology and content, especially in international markets with less penetration and higher growth rates.
Though increased expenses may hurt the company’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.
Zacks Rank & Other Stocks to Consider
Currently, Amazon carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Groupon GRPN, PetMed Express PETS and Expedia EXPE. While Groupon and Expedia sports a Zacks Rank #1 (Strong Buy), PetMed holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Groupon, PetMed and Expedia is currently projected to be 6.5%, 10% and 14.5%, respectively.
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