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Amazon to Open Ninth Robotic Fulfillment Center in Texas

Zacks Equity Research

In order to meet growing demand in the online shopping space, Amazon.com Inc. AMZN announced plans to open its ninth fulfillment center in Coppell, TX.

According to Amazon, this new facility will create more than 1,000 full-time jobs. The center will primarily focus on smaller items such as books, electronics and toys. The third Coppell facility is expected to be one of Amazon’s latest-generation fulfillment centers where robots, vision systems and other high-end technologies will be used to speed up order deliveries.

Over the last one year, shares of Amazon have been steadily treading higher. The stock has returned 40.95% compared with the Electronic Commerce industry’s gain of 33.42%.

Details About Fulfillment Centers in Texas

The world’s largest online retailer has been strengthening its presence in Texas where it has invested millions of dollars. Over the past few years, Amazon has announced multiple facilities in the state with healthy business environment and skilled manpower.

To date, Amazon has created over 10,000 full-time jobs in Texas and continues to hire manpower to meet growing customer demand.

Currently, Amazon has seven fulfillment centers in Texas which are fully operational, located in Haslet, Dallas, Fort Worth, Schertz, San Marcos and two facilities in Coppell.  One other facility in Houston is under construction.

Amazon stated that it pays competitive wages and gives 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.

Amazon’s vice president of North American operations, Akash Chauhan recently said, “This building will be a new addition to the Amazon Robotics fulfillment network, which already has a robust presence in the metroplex.” He added that the increased inventory on hand and better speed of fulfillment will help Amazon in meeting increasing customer demand.

What Are 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 come to expect from Amazon.

The company has invested heavily in fulfillment centers across the country to cut shipping costs and speed up delivery. As prompt and accurate delivery of products is crucial to the success of online retail companies, Amazon has been adding new high-end technologies to its fulfillment centers. The deployment of robots decreases the time taken to sort and pack products, thereby strengthening its same-day or overnight delivery services.

Small retailers that are unable to provide relatively cost-efficient shipping are also signing up for Amazon’s fulfillment services. Third parties also avail the company’s warehouses and shipping services. These help online retailers boost revenues and drive expansion.

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. 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.

Though increased expenses may 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 & Stocks to Consider

Currently, Amazon has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry are Akamai Technologies AKAM, boohoo.com plc BHOOY and Itron, Inc. ITRI. Each of these companies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Akamai Technologies, Inc. posted a positive earnings surprise of 2.51% in the trailing four quarters.

boohoo.com plc delivered an average positive earnings surprise of 14.05% in the trailing four quarters.

Itron, Inc delivered a positive earnings surprise of 30.55% on average in the past four quarters.

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Amazon.com Inc. (AMZN): Free Stock Analysis Report
 
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