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Amazon on a Hiring Spree

Read MoreHide Full Article Inc. (AMZN - Free Report) , the world's largest online retailer plans to hire 7,000 workers for its warehouse and order-fulfillment centers.

The company said that it will add 5,000 full-time jobs and 2,000 customer-service staff, including part-time and seasonal workers to meet the increasing demand for its products.

Fulfillment centers are giant warehouses that help Amazon and other online retailers to store products, ship them and handle returns quickly. These are important for providing the level of customer service that Amazon customers have come to expect of the company.

The recent surge in recruitment comes from the company’s decision to expand its fulfillment centers all around the country. In order to deliver goods on time, the company has been spending heavily on new fulfillment centers. A Bloomberg report states that Amazon plans to add 5 more facilities this year, after opening 20 fulfillment centers in 2012.

The need for fulfillment center expansion is rising due to the growing demand for online shopping and the ever-increasing needs of Internet users. Prompt and accurate delivery of products is very important for the success of an online retail company.

Also, small retailers find it difficult to provide their customers with relatively cost-efficient same day/next day shipping like Amazon. Hence, they have also been signing up for fulfillment by Amazon, where the company stores their products in its warehouses, ships them and makes those items eligible for Amazon Prime free two-day shipping.

We believe that for Amazon to remain at the top, it is important to maintain its U.S. market share and expand globally. For this Amazon needs to invest more in both fulfillment and technology and content, especially in international markets, where growth rates are likely to be higher.

Though the increased expenses could hurt the company’s bottom line in the near term, we believe these investments are necessary to maintain its dominance in this highly competitive market.

Currently,Amazon shares retain a Zacks Rank #5 (Strong Sell). Other stocks that have been performing well and are worth a look include Orbitz Worldwide Inc. , Inc. (STMP - Free Report) and PetMed Express (PETS - Free Report) , all carrying a Zacks Rank #2 (Buy).

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