Amazon.com, Inc. (AMZN - Free Report) has expanded its partnership with aircraft leasing company Air Transport Services Group, Inc. (ATSG - Free Report) , in a bid to ramp up its delivery efforts.
Per the deal, ATSG will lease an additional 10 aircraft to support Amazon’s delivery services. These new cargo planes from ATSG will join Amazon’s fleet over the course of next two years.
Prior to the announcement, Amazon’s air fleet operations had a total of 40 aircraft in use, which will now increase to 50.
This deal is another step on Amazon’s part toward building its own in-house shipping and logistics service.
Amazon Beefs Up Logistics
Amazon is taking bold steps to get an edge in the logistics business. This is evident from the company’s efforts to use air cargo hubs and drones to deliver products to customers.
Just recently, the company announced its plans to open a regional air hub at the Fort Worth Alliance Airport, which is expected to commence operations from 2019 and create multiple job opportunities for North Texas residents.
The most recent move underscores Amazon’s accelerated push toward building its own in-house shipping and logistics service to support the complex network of fulfillment, logistics and delivery systems that it has been building.
The company, which has built a strong network of 185 fulfillment centers worldwide, deploys robotics, machine learning, algorithms and other technological advancements to improve delivery speed.
Building its own in-house shipping and logistics service will help Amazon to address increasing delivery demand and improve delivery speed at its Prime business.
Prime - Always a Priority
Amazon continues to benefit from robust Prime program, which gives it a competitive edge in the retail business. Prime also boasts a loyal subscriber base. Its offers and fast delivery option encourage customers to spend more on Amazon, in turn helping to boost the company’s revenues.
Notably, Prime members are much more loyal and spend double the amount spent by non-Prime members.
In the last reported quarter, the e-commerce giant significantly expanded its grocery services, which include delivery as well as pick-up services for natural and organic products. The service is currently available in more than 60 U.S. cities.
The company also unveiled Prime Book Box, a subscription service aimed at instilling the habit of reading story books among children. Additionally, in the last reported quarter, Amazon expanded its global footprint by making Prime available to individuals in Canada and Mexico. Further, the company’s growing initiatives toward enriching its video portfolio with regional and award-winning content remain a tailwind.
Given increasing engagement of Prime customers, the company is leaving no stone unturned to ensure that their requirements are met. From the span of a day to two hours, two hours to 15 minutes and 15 minutes to two minutes, Amazon has been cutting down on its delivery time for Prime members.
Therefore, we believe that Amazon is moving in the right direction by gaining control over its delivery services network, the demand for which is expected to grow going forward.
Zacks Rank & Stocks to Consider
Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include AMETEK, Inc. (AME - Free Report) and Stamps.com Inc. (STMP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for AMETEK and Stamps.com is currently pegged at 11.18% and 15%, respectively.
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