As per a WSJ report, Amazon (NASDAQ:AMZN) is bolstering its same-day delivery service in order to combat the growing competition. The e-commerce giant is expanding its network of warehouses to ensure ultrafast delivery of its products in less than a day.
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The report stated that the company is opening smaller facilities, called same-day sites, which are generally located near large cities and deliver the most popular items in Amazon’s list of product offerings. The company recently opened new facilities in Los Angeles, San Francisco, and Phoenix.
Meanwhile, Amazon is reportedly mulling over whether to charge extra for the service or use it as bait to retain subscribers of its Prime service, which costs $139 annually. Prime gives customers streaming and free delivery of some packages.
Moving ahead, the expansion of ultrafast delivery facilities is expected to support Amazon against competition from companies like Walmart (WMT) and Instacart, which also provide similar services to their customers.
The move comes at a time when Amazon has been struggling with weak revenues. This is due to a slowdown in e-commerce sales as macro pressures and inflation hit consumers’ spending power. In its Q4 earnings call, the company provided lackluster guidance that fell below analysts’ expectations and noted that the headwinds are expected to continue for the next couple of quarters.
Is Amazon a Buy, Hold, or Sell?
The Wall Street community remains optimistic about AMZN stock. It commands a Strong Buy consensus rating based on 36 Buys and two Holds. Amazon’s average price target of $137.05 implies 46.6% upside potential from current levels. Shares of the company have gained 9% so far in 2023.
