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Amazon (AMZN) to Halt Amazon Shipping to Meet Customer Demand

Zacks Equity Research

Amazon AMZN recently announced that it is temporarily suspending its own delivery service, Amazon Shipping, starting June.

The service, which is operational in few U.S. cities, allows drivers to collect non-Amazon and Amazon marketplace packages from sellers and deliver them directly to customers.

The decision can be attributed to surging demand that the company has been witnessing as result of panic shopping on its online retail platform and physical stores like Whole Foods market due to the coronavirus-induced crisis.

This has resulted in the company grappling with delivery issues as the delivery capacity has remained constant while the demand has gone up.

Thereby, suspension of Amazon Shipping will help the company focus on its core delivery operations in this crisis scenario by allocating workers and drivers to the same.

Although Amazon is likely to lose on competitive grounds to certain extent against United Parcel Services UPS and FedEx FDX on the back of its latest move, it will be able to meet the increasing customer demand on time.

Amazon’s Customer-Centric Approach

Amazon Shipping ban reflects the e-commerce giant’s strong commitment toward the betterment of customers, which remains the key catalyst behind its business growth and dominant position in the online retail market. Moreover, its customer-oriented initiatives have been instilling investor optimism in the stock.

Coming to the price performance, Amazon has returned 9.6% over a year against the industry’s decline of 0.1%.



Apart from the latest move, the company has taken other initiatives to deliver better customer experience during the COVID-19-induced crisis situation.

Its Whole Foods stores in the United States, Canada and United Kingdom, will dedicate an entire hour to serve only senior citizens in an attempt to keep them safe from crowd as they are more susceptible to COVID-19 infection.

Additionally, Whole Foods stores are closing two hours earlier in order to sanitize stores and restock shelves.

Further, the company has taken an initiative to bolster its Same-Day Delivery program by making same-day delivery service available in the cities of Philadelphia, Phoenix, Orlando and Dallas for Prime members.

Further, the company has built mini-fulfillment centers, which are first of their kind buildings. Notably, the new facilities are located closer to customers, which is likely to help Amazon to reduce the number of hours taken to deliver orders via same-day delivery services.

Amazon’s Hiring Drive

The latest move bodes well for Amazon’s growing initiatives to strengthen workforce to handle the flurry of orders during challenging situation.

The company has recently announced plans to hire 100,000 warehouse and delivery employees.

Further, it partnered with ride-hailing company, Lyft LYFT. Per the deal, Lyft has asked its drivers to consider job opportunities at Amazon as means of additional income. These comprise delivery drivers, warehouse and shopper jobs.

This is expected to boost the strength of the company’s warehouse workers and delivery drivers.

All the abovementioned endeavours will help Amazon in sustaining customer momentum during this challenging situation.

Currently, Amazon carries a Zacks Rank #3 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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