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Amazon (AMZN) Plans to Open Sixth Fulfillment Center in Ohio

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Amazon.com Inc. AMZN plans to expand in Ohio with its sixth fulfillment center in West Jefferson.

For the last few years, the company has been spending heavily on its new fulfillment centers. These are important in order to provide the level of service that customers have started expecting from Amazon.

In addition, there is exciting news for Amazon’s Prime members. The company has announced that it will now offer exclusive discounts to Prime members who shop at Whole Foods. They can now avail a discount of 10% on purchasing any item at Whole Foods stores. Starting at Whole Foods stores in Florida, the discount scheme will further expand to other stores in the coming days.

Meanwhile, the company has been implementing perks for its Prime members in Whole Foods since it acquired the grocery chain last year for $13.7 billion. It already offers 5% cash-back benefit to the prime members who use Amazon Prime Rewards Visa card while shopping at any Whole Foods store.

We believe, the company’s continuous efforts in making Prime more customer friendly will continue to drive subscription base of the service, improving the top line further.

Over the last year, the company has outperformed the industry it belongs to. Shares of Amazon have gained 63.3% compared with the industry’s growth of 46.3%.

Amazon’s strong focus on enhancing the Prime service aided by exciting discounts, free delivery within a short period of time, expanding movies & video portfolio and many more, has helped the company achieve this feat.

More on the Headlines

The latest fulfillment center spans more than 855,000 square feet and will create 1,500 new full-time jobs

Apart from that, this new facility will be primarily focusing on smaller items such as electronics, books, housewares and toys.

The world’s largest online retailer has been strengthening its presence in Ohio where it has invested over $2 billion in the state, both in customer fulfillment infrastructure and compensation to its employees in the state. In the last few years, Amazon has announced multiple facilities in the state with healthy business environment and skilled manpower.

The online giant has created more than 6,000 full-time jobs in Ohio. Using methodology developed by the U.S. Bureau of Economic Analysis, Amazon estimates its investments in Ohio have created an additional 9,000 indirect jobs on top of the company’s direct hires.

Bottom Line

We feel, Amazon must maintain its U.S. market share, while expanding globally in order to retain its leading position. For this, 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.

Although increased expenses might hurt the company’s bottom line in the near term, we believe this is necessary for the company to maintain its dominance in this highly competitive market.

Amazon.com, Inc. Price and Consensus


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

Zacks Rank & Other Stock to Consider

Amazon carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the technology sector are Groupon, Inc. GRPN, Expedia Group, Inc. EXPE and PetMed Express PETS. While Groupon, Inc.sports a Zacks Rank #1, Expedia and PetMed carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Groupon, Expedia and PetMed is projected to be 6.5%, 14.5% and 10%, respectively.

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