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Amazon’s Efficiency in Order Fulfillment Gives It a Competitive Advantage


Piper Sandler analyst, Thomas Champion, has raised his price target on Amazon (ticker: AMZN) to $185 from $175. This suggests a 37% gain from the stock’s closing price on Wednesday. In a research note, Champion maintained his Overweight rating on the stock and stated that now is the time to buy.

Champion highlights that Amazon’s focus on shipping and filling orders has made the company even more efficient and has given it a competitive edge over its peers. He mentions that evidence of this efficiency can be seen in the company’s gross margins and the strong incremental operating income guide for the third quarter of 2023, which was the strongest in Amazon’s history.

During Amazon’s recent earnings conference call, CEO Andrew Jassy mentioned the meaningful improvement in lowering the cost of filling orders. This was achieved by transitioning the company’s fulfillment and transportation network from one national system in the U.S. to eight separate regions serving smaller areas.

Champion also believes that Amazon has the potential to gain market share due to its investments in faster delivery, which has resulted in customer service advantages over its peers who are dealing with shrink issues (loss of merchandise due to theft and errors).

Amazon’s stock price remained flat at $135.23 on Thursday. However, it has already surged by 61% in 2023.

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