Amazon (AMZN) Set To Open New Fulfillment Center In Bolton

Amazon.com Inc. (NASDAQ:AMZN) plans to further expand its presence in the U.K. by opening another fulfillment center in Bolton, in the north west of England.

For the last few years, the company has been spending heavily on its new fulfillment centers. These are important in order to provide the level of service customers have started expecting from Amazon.

Notably, Amazon has underperformed the industry on a year-to-date basis. Shares of the company have gained 33.7% compared with the industry’s growth of 52.2%.

More About the New Facility

The new fulfillment center is expected to create 1,200 new full-time jobs, once the site gets operational in 2018.

This new facility will focus on Amazon’s latest techniques where robots, vision systems and other high-end technologies will be used to speed up order deliveries.

The online retailer has been increasing its investments to build and modernize fulfillment centers primarily to cut shipping costs and speed up delivery. Amazon, which already has 16 facilities in Britain, has been trying to increase its presence in the region. Since 2010, it has invested 6.4 billion pounds ($8.3 billion) in Britain to expand logistics, order filling, research and development and head office functions.

In 2016, Amazon’s capital expenditure increased 51% on a year-over-year basis. A major part of it was utilized in the construction of 26 fulfillment centers and deployment of robotics technology inside them.

Bottom Line

Fulfillment centers help Amazon in storage and shipping of products, besides handling returns quickly. In fact, these are important in order to provide the level of services customers expect from the company.

Additionally, small retailers, who are unable to provide relatively cost-efficient shipping, are signing up for Amazon’s fulfillment services. Third parties also avail the company’s warehouses and shipping services. These, in turn, help the company boost revenues and drive expansion in the long haul.

However, heavy investments in these arrangements (and several other initiatives) are keeping Amazon’s margins under pressure, thereby negatively impacting its bottom line. Also, Amazon’s retail business is currently facing stiff competition from Alibaba (NYSE:BABA) and eBay, among others.

Zacks Rank & Stock to Consider

Amazon currently has a Zacks Rank #5 (Strong Sell). Other top-ranked stocks in the broader technology sector are Applied Materials, Inc. (NASDAQ:AMAT) and NVIDIA Corporation (NASDAQ:NVDA) , sporting a Zacks Rank #1 (Strong Buy), and ASML Holding (AS:ASML) N.V. (NASDAQ:ASML) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Applied Materials NVIDIA Corporation and ASML Holding N.V. is projected to be 17.1%, 10.3% and 21.4%, respectively.

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