Shares for e-tail giant Amazon (AMZN) were up in premarket trade. Here are three reasons why:
1. Amazon is Expanding its Delivery Network
The multinational indicated in a Bloomberg report that it was expanding its delivery network, which sparked speculation that the e-commerce company might be trying to overtake USPS, FedEX (FDX) or UPS (UPS).
Amazon made it clear that was not its intention, but the company has made significant investments in delivery and logistics.
CEO Jeff Bezos said Amazon takes “all the capacity” UPS and USPS gives them, but the company still needs to supplement it to meet the demands of consumers. Bezos says Amazon is actually growing its business with USPS and UPS.
2. Consumer Demand is High, Shipping is Expensive
Consumer demand is skyrocketing, Amazon says, and more people are signing up for Amazon Prime.
The company is expected to sell 7.2 billion items in 2016 alone.
Last year, Amazon spent $11.5 billion in shipping costs, nearly double the amount it spent two years ago.
3. Amazon is Focusing on Faster Shipping
To meet the demands of customers, who want their goods “now,” Amazon has shifted its focus to quicker shipping options.
Prime Now, a two-hour delivery option, was launched in 2014 and has expanded to 65 hubs across the country. The service is now available in 40 cities.
Amazon is now purchasing truck trailers (4,000 of them) and leasing jets (at least 20) to speed up shipping times. It also opened 28 sorting centers and 59 delivery stations.
While the company does most of its shipping through USPS and other carriers, it’s gradually expanding its own logistics and delivery network, the Bloomberg report says.
Recently, Amazon launched its very first Prime Air airplane and has also expanded its drone delivery network. Amazon’s plane is a Boeing 767.
