Amazon ( AMZN ) is gaining fulfillment power from robotics

AmazonAMZN shares are up 19.7% year-to-date, outperforming the Zacks Retail and Wholesale sector return of 9%. The e-commerce giant continues to gain traction in the booming online shopping space thanks to its distribution strength and expanding fulfillment network. Amazon currently operates 110 fulfillment centers in the United States and 185 fulfillment centers worldwide.

Of note is the company’s increasing focus on supporting automation in its fulfillment centers with the support of Amazon Robotics.

To maintain its dominant position in the e-commerce market, Amazon must continue to increase investment in fulfillment centers in the United States and international regions.

To this end, the company recently inaugurated a robotics fulfillment center called YYC4 in Canada, located in Calgary, Alberta.

The 2.8 million-square-foot facility aims to improve employee productivity and safety using automated systems and robots. The YYC4 is equipped with RWC4 robotics technology that helps sort cases and construct pallets for shipping. Amazon has also implemented a cart called Kermit that transports empty crates.

The company strives to offer on-demand skills training, create job opportunities and fulfill customer orders as quickly as possible using advanced robotics technology.

With the launch of YYC4, Amazon has expanded its presence in Canada. It currently has five fulfillment centers, one sortation center, three delivery stations and two AMXL delivery stations in Alberta.

Amazon.com, Inc. Price and consensus

Amazon.com, Inc. price consensus chart | Amazon.com, Inc. Quote

The power of fulfillment in robotics to support development

Robotics using AI and ML techniques is becoming mainstream in the retail industry. According to Maximize Research Report, the global retail robotics market is expected to register a CAGR of 32.5% during 2023-2029.

Amazon remains well-positioned to capitalize on this growth prospect with a growing number of robotics fulfillment centers around the world.

According to its first-quarter 2024 earnings release, the company operates robotics fulfillment centers in 11 countries that help improve workplace ergonomics and reduce the need for heavy lifting and repetitive tasks.

Amazon intends to open such facilities in Asturias, Spain and the city of Sagamihara in Japan.

The company’s concerted efforts to improve retail and fulfillment robots are other positives.

Of note is Amazon’s introduction of the Titan mobile robot, which is designed to lift up to 2,500 pounds in its fulfillment centers. The company’s robotics technology also includes Sequoia, which helps identify and store inventory received at logistics centers up to 75% faster than a human. In this way, it helps to increase the number of goods delivered on the same or next day.

The growing power of order fulfillment robotics is expected to help Amazon drive customer momentum in the e-commerce space. This, in turn, will translate into an increase in sales in online stores, which in the first quarter of 2024 amounted to USD 54.7 billion, which means an increase of 7% year-on-year.

The Zacks Consensus Estimate for the same is projected at $244.8 billion for 2024, up 5.6% from the 2023 reported level.

Strengthening sales in the online store will, in turn, affect Amazon’s overall financial results.

The consensus estimate for 2024 sales is $638.24 billion, up 11% year-over-year. The same goes for 2024 earnings, which were $4.58 per share, suggesting year-over-year growth of 57.9%. Over the last 30 days, the estimate has been revised upwards by 11.7%.

On the competitive side, this Zacks Rank #3 (Hold) company has stepped up its fight for Walmart WMT, which is trying to reduce the gap to Amazon in the e-commerce category.

Of note is Walmart’s growing use of mobile shelf-scanning robots, which can detect any shelf errors in Walmart stores across the United States. The company is also accelerating the implementation of automation throughout the supply chain.

Zacks Rank and Stocks to Consider

Amazon is currently sporting a Zacks Rank #3 (Hold).

Some retail and wholesale companies are better valued Break GPS i Kupang CPNG, each currently sporting a Zacks Rank #2 (Buy). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Since the beginning of the year, the difference has increased by 2.8%. GPS’s long-term earnings growth rate is estimated at 12%.

Coupang shares are up 73.2% year to date. CPNG’s current projected long-term earnings growth rate is 33.83%.

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