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Amazon (AMZN) New Fulfilment Centers in India to Create Jobs

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In a bid to strengthen its presence in India, Amazon (AMZN - Free Report) recently made an announcement to open two new fulfilment centers in the country, which will be located in Lucknow, Uttar Pradesh.

The new facilities include a fulfilment center, and a specialized center for large equipment and furniture.

Amazon already has a fulfilment center in Uttar Pradesh.

The three centers have more than 3 million cubic feet of storage capacity for large appliances, consumer electronics, fashion items, smartphones and grocery.

With the launch of new centers, Amazon strives to create thousands of direct and indirect work opportunities for locals, and provides a helping hand to more than 90,000 sellers to meet the growing customer demand.

The expansion of fulfilment centers in the state represents the company’s plans to expand its pan-India fulfilment storage capacity by 40% for delivering a total storage capacity of 43 million cubic feet to its sellers across the country in 2021.

Amazon’s Growing Investments in India

The recent move is in sync with Amazon’s growing focus on investments and employment generation in the country.

This month, it also introduced a fulfilment center in Bengaluru, Karnataka, which happens to be its largest fulfilment center in the country. It will generate employment for the locals and help micro, small & medium enterprises (MSMEs), artisans as well as startups to sell their products.

Last month, it expanded its fulfilment network in Telangana with the launch of its fifth fulfilment center in the state. The company has made plans to empower MSMEs and support sellers for catering to the growing customer demand.

With these growing infrastructure facilities in the country, Amazon plans to exceed its goal of generating 1 million incremental jobs by 2025. It has already employed 3 lakh people over the past year.

Further, it has opened its first ‘Digital Kendra’ in Surat, Gujarat in a bid to encourage MSMEs to adopt digital technologies for selling their products amid the pandemic. The move is part of its commitment of digitizing 10 million MSMEs by 2025.

In April, it made an announcement of a $250-million venture fund named Amazon Smbhav Venture Fund for investing in the country’s startups and entrepreneurs focusing on the digitization of small and medium-sized businesses in the key overseas market.

Competitive Scenario

With growing investments in the country, Amazon continues to strengthen its seller ecosystem. It is thereby offering more products on its e-commerce platform and gaining momentum across customers.

However, it faces stiff competition from companies like Walmart (WMT - Free Report) -owned Flipkart, Reliance Industries’ subsidiary JioMart and Facebook (FB - Free Report) , which are also taking strong initiatives to expand seller base in their retail platforms.

Recently, Flipkart announced that it has added nearly 75,000 sellers on its platform in the past few months. It is also working toward introducing more than 4.2 lakh sellers and MSMEs by the end of 2021.

Last year, Facebook introduced Facebook Shops to help small businesses set up a single online platform, and get discovered by customers on both Facebook and Instagram.

Further, JioMart is gaining a strong position in the retail space as it has added 3 lakh merchants and local shopkeepers across 150 cities within a year. The company plans to add another 10 million merchant partners in three years. Further, it is working toward its integration with Facebook’s subsidiary WhatsApp, which remains noteworthy.

Zacks Rank & Stock to Consider

Currently, Amazon carries a Zacks Rank #4 (Sell).

A better-ranked stock in the retail-wholesale sector is Revolve Group (RVLV - Free Report) , carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Revolve Group is currently projected at 20.7%.


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