Amazon.com Inc. AMZN announced plans to open a new fulfillment center in Scarborough, located in the City of Toronto, in order to meet the growing demand in the online shopping space.
The company has been spending heavily on new fulfillment centers over the past few years. Fulfillment centers are giant warehouses that help online retailers store and ship products, as well as handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.
According to the company, the new facility will span 1 million square foot. The employees will pick, pack and ship small customer items such as toys, electronics and baby products at the facility.
The facility is expected to create more than 600 full-time jobs. This is expected to be one of Amazon’s latest-generation fulfillment centers wherein robots, vision systems and other high-end technologies will be used to speed up order deliveries.
Robotics that utilizes AI and ML techniques are becoming mainstream in the retail industry. Per a report from Bekryl, the global market for retail robots is expected to witness a CAGR of 30% between 2017 and 2028.
Amazon is well poised to reap benefits from this booming market with growing robotic initiatives.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Canada Expansion Continues
The online retailer has been strengthening presence in Canada over the past two years. The new center in Scarborough will be Amazon’s 12th fulfillment center in Canada and seventh in Ontario.
To date, the company has employed more than 4,000 full-time associates in Ontario and an additional 1,000 employees in Toronto. In 2018, it had announced plans to create more than 6,000 jobs across the country.
The company continues to hire manpower to meet growing customer demand. It has been increasingly pouring cash to build and modernize fulfillment centers, mainly to cut shipping costs and speed up delivery.
Amazon has been strengthening presence all over the world.
In our view, the company must maintain its U.S. market share while expanding globally, in order to retain the leading position. To this end, it needs to invest more in fulfillment, technology and content, especially in international markets with less penetration and higher growth rates.
Although increased expenses may hurt Amazon’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.
Zacks Rank & Stocks to Consider
Currently, Amazon has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet Inc. GOOGL, Itron, Inc. ITRI and MACOM Technology Solutions Holdings, Inc. MTSI, each carrying 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 Alphabet, Itron and MACOM Technology is currently projected at 17.5%, 25% and 15%, respectively.
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