Amazon AMZN is making every effort to bolster its e-commerce business in India. The company is on its fulfillment network expansion spree in the country.
The recent launch of two fulfillment centers in Maharashtra is a testament to the above-mentioned fact. Notably, one of the facilities is located in Mumbai, which will be primarily utilized for storing large appliances and furniture. Another fulfillment center is located in Pune.
With the latest move, the company’s total number of fulfillment centers in the state reaches the mark of 10, which is equivalent to more than 9 million cubic feet of storage capacity. Thus, the move has doubled Amazon’s storage capacity from the last year.
The company has expanded one of its existing fulfillment centers in Mumbai along with the launch of new facilities.
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Rationale Behind the Move
The latest move not only expands the fulfillment network of Amazon but also brings socio-economic benefits to Maharashtra.
With the new facilities, the company strives to create various full-time as well as part-time jobs, especially for locals from various backgrounds.
Apart from this, the move will boost the company’s distribution strength, which, in turn, will aid it in delivering an enhanced shopping experience to customers.
Customers will be able to enjoy fast delivery of their purchases.
The company aims at helping its vast seller base in expanding reach to customers on the back of its latest move.
Furthermore, the move is an addition to the company’s growing investments in the state. Apart from the 10 fulfillment centers, Amazon operates 7 sort centers, and 200 Amazon-owned and delivery service partner stations.
Amazon’s Expansion Spree
The latest launch is in sync with Amazon’s deepening focus toward expanding its fulfillment network in India, wherein the online retail market holds immense growth opportunities.
According to a report from India Brand Equity Foundation, the India e-commerce market is expected to reach $111.4 billion by 2025 from $46.2 billion in 2020.
Notably, the company aims at expanding its fulfillment and storage capacity to 40% this year. Amazon already owns more than 60 fulfillment centers in the country. Its overall storage capacity spans more than 43 million cubic feet.
Apart from the latest launch, the company recently made an announcement to open two fulfillment centers in Lucknow, Uttar Pradesh. The new facilities include a fulfillment center, and a specialized center for large equipment and furniture.
Amazon launched a specialized fulfillment center in Gujarat, bringing an extra 1.4 million cubic feet of storage capacity. It has also expanded its existing fulfillment facility in the state.
Notably, the two fulfillment centers in Gujarat offer a storage capacity of 2.5 million cubic feet.
We note that Amazon remains well-poised to penetrate the booming India e-commerce market with its continued investment in fulfillment centers, which are giant warehouses that help online retailers store and ship products, and handle returns quickly.
However, escalating expenditure related to fulfillment remains a major concern for Amazon. Notably, the company’s cost of fulfillment increased 27.8% year over year to $17.6 billion in second-quarter 2021.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the retail-wholesale sector are Revolve Group, Inc. RVLV, The Kroger Co. KR and Walmart Inc. WMT. While Revolve Group and Kroger currently sport a Zacks Rank #1 (Strong Buy), Walmart carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rates for Revolve Group, Kroger and Walmart are pegged at 20.71%, 8.91% and 5.5%, respectively.
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