Amazon.com, Inc. AMZN is poised to start handling all of its own shipments by heavily expanding both its third-party logistics and freight forwarder businesses going forward. The move comes along with a bevy of other plans to grow the multibillion-dollar e-commerce company into much more.
Amazon has made a concerted effort over the last few years to increase its own delivery business. The company has focused heavily on the Christmas and holiday season when demand ramps up. Amazon is growing so quickly that it has set its sights on creating its own international cargo and shipment business.
The Seattle-based online retail giant plans to grow its own shipping and cargo capabilities to compete directly with some of the largest delivery and logistics companies like United Parcel Service, Inc. UPS and FedEx Corporation FDX.
The company has already been handling the shipment of its goods from China to the U.S. via cargo ships. Amazon, via its Amazon Logistics sector, will offer end-to-end one-stop ocean freight services specifically from Chinese merchants. Amazon has posted rates for its new logistics services. But plans for its Chinese air shipment center are still unknown.
Amazon is also planning to build a U.S. air cargo center. The company plans to lease 40 cargo jets. The air hub is expected to be located at the Cincinnati/Northern Kentucky International Airport, nearby new rivals UPS and FedEx. The new air cargo hub hopes to create over 2,000 jobs. The company also added 4,000 semi trailers to bolster its trucking fleet across the U.S.
According to Amazon Logistics, customers can “leverage our volume, grow your business and make more money.” The company will deliver mainly to the U.S., Europe and Japan. Amazon’s push into logistics will likely focus more on digital and online-heavy services than some of its competitors that operate in less efficient ways.
How is Amazon Doing?
Amazon’s stock is down 0.23% to $850.62 per share and is currently a Zacks Rank #3 (HOLD).
The company reported $6.4 billion in sales in 2016 from Amazon Prime alone, up 43% year-over-year. According to Morgan Stanley analyst Brian Nowak the massive number means that Prime had about 65 million members in 2016
Amazon’s third-party service revenue was $23 billion, also up 43%. Amazon Web Services, its cloud computing business, revenue was $12 billion, up 55%. Amazon’s retail services revenue, its primary business, was $91 billion in 2016, up 19% year-over-year.
Amazon’s total 2016 revenue was $136 billion, up 27% from 2015. But Amazon still has room to expand its business. Worldwide e-commerce sales were $1.9 trillion in 2016.
Amazon went public in 1997 at $18 per share. An initial $1,000 investment, accounting for stock splits, would have been worth $350,803 by 2015. Since Dec. 2015, Amazon’s stock price skyrocketed from $689 per share to its current $850 per share price.
Amazon announced on Wednesday it would begin delivering beer, wine and champagne within a one or two-hour window as part of Prime Now. The initial trial run will take place in Cincinnati and Columbus, Ohio.
Prime Now offers free two-hour delivery for thousands of household items and other Amazon products. Now services are part of Amazon Prime. A Prime membership costs $99 a year. Prime services include free two-day shipping for over 50 million items, Prime Video, free Kindle e-books, unlimited photo storage and more.
According to GeekWire, Amazon is close to introducing its new concept grocery store called AmazonFresh Pickup in Seattle.
Amazon’s Fire TV service offers a great deal of original programming. Amazon Studios purchased the movie Manchester By The Sea for $10 million last year. It won Oscars for Lead Actor and Original Screenplay in 2017. The company says it will release 15 films in 2017, matching its 2016 output.
Amazon Echo, the company’s smart speakers that are supported by Amazon’s voice controlled intelligent personal assistant Alexa, sold 5.2 million units in 2016, up from 2.4 million in 2015. Amazon Prime customers can order items directly through Echo using voice commands.
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