Amazon To Come Up With First Fulfillment Center In Fresno

In an effort to meet growing demand in the online shopping space, Amazon.com Inc. (NASDAQ:AMZN) has announced its plans of opening a second fulfillment center in Fresno, California.

In the last two years, shares of Amazon have been steadily treading higher. The stock has returned 134.1% compared with the Electronic Commerce industry’s gain of 59.9%.

The New Frenso Center

According to Amazon, the new facility, spanning 855,000 square feet, will create more than many full-time jobs. The center will primarily focus on smaller items such as books, electronic devices and children’s toys.

This will be Amazon’s fifth fulfillment center in California’s Central Valley. While three fulfillment centers in Tracy and Patterson are already operational, the fourth facility in Sacramento is under construction. Other fulfillment facilities in California are located in San Bernardino, Redlands, Moreno Valley, Rialto, Eastvale and Newark.

Amazon stated that it pays competitive wages and gives healthcare and other full-time employee benefits. Additionally, 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.

What are Fulfillment Centers?

Fulfillment centers are giant warehouses that help online retailers in storing and shipping products and handling returns quickly. These are important for providing the level of service that customers have come to expect from Amazon.

In the past few years, the company has invested heavily in fulfillment centers across the country to cut shipping costs and speed up delivery. Prompt and accurate delivery of products is crucial to the success of online retail companies.

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 across the globe. To date, Amazon has created millions of full-time jobs and continues to hire manpower to meet growing customer demand.

We feel, 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.

Although increased expenses may hurt the company’s bottom line in the near term, we believe it 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 #3 (Hold). Other better-ranked stocks in the industry are Autobytel Inc. (NASDAQ:ABTL) , Mercadolibre, Inc. (NASDAQ:MELI) and PetMed Express, Inc. (NASDAQ:PETS) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Autobytel Inc. delivered a positive earnings surprise of 41.98%, on average, in the trailing four quarters.

Mercadolibre, Inc. delivered a positive earnings surprise of 26.74%, on average, in the trailing four quarters.

PetMed Express, Inc. delivered a positive earnings surprise of 9.32%, on average, in the trailing four quarters.

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