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Amazon (AMZN) to Expand in Detroit With New Investments

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Zacks Equity Research
·3 min read
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Amazon.com Inc. AMZN recently announced plans to increase investment in Michigan.

The company intends to open five new sites in the Detroit area. These sites are expected to create more than 2,000 permanent jobs, including both full and part time.

These employees will be entitled to a minimum of $15 per hour wage, with other comprehensive benefits.

Meanwhile, Amazon has been increasingly investing to build and modernize fulfillment centers, mainly to cut shipping costs and speed up delivery.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

More on the Headlines

The e-commerce giant has been successful in creating multiple job opportunities, while strengthening services all over the world.

On one of the five new sites, the company will open a new 823,000 square-foot fulfillment center in Detroit. This facility will be the fourth fulfillment center in the state and is expected to create more than 1,200 full-time jobs. It will use robotics to pick up smaller items.

On the contrary, the other four sites will take care of large products.

Coming to Michigan, the company has been strengthening presence in the state and has already invested billions in the same. Since 2010, Amazon has created in excess of 13,500 jobs and invested more than $2.5 billion in the state.

The investment has been made in multiple fulfillment facilities and cloud infrastructure, among others. Reportedly, these investments have generated an additional 10,000 indirect jobs.

The latest investment is further expected to complement its robust growth in Michigan.

Markedly, Amazon invested more than $2.5 million in 2020 in multiple nonprofit organizations in the region.

Bottom Line

Fulfillment centers help Amazon in storage and shipping of products, in addition to handling returns quickly. In fact, these are important for providing the level of service that customers expect from the company.

In addition, small retailers that are unable to provide relatively cost-efficient shipping are signing up for Amazon’s fulfillment services. Third parties also avail the company’s warehouses and shipping services. These, in turn, help it boost revenues and drive expansion in the long haul.

Although heavy investments in these arrangements (and several other initiatives) keep Amazon’s margins under pressure, these are responsible for the company’s progress. Evidently, Amazon’s retail business is currently unbeatable in terms of price, choice and convenience in the face of fierce competition from Alibaba BABA and eBay EBAY, among others.

Furthermore, we believe that Amazon’s long history of execution, growing focus on innovation, technological prowess and huge cash balance not only give it the flexibility to pursue growth in potential areas but also create value for investors.

Zacks Rank & Stock to Consider

Amazon currently has a Zacks Rank #3 (Hold). A better-ranked stock in the broader technology sector is Revolve Group, Inc. RVLV, holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Revolve Group is currently projected at 16.5%.

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