Amazon (NASDAQ:AMZN) is offering some of its U.S. Prime customers $10 to pick up their purchases from stores rather than have them shipped to their locations as demand declines and delivery costs rise, according to Reuters. According to New York-based shipping consultant Dean Maciuba, the move offers an opportunity to cut costs and could help the world’s largest online retailer avoid expensive drop-off fees.
The report emphasized that the offer is applicable to orders of $25 or more.
It’s worth highlighting that free and fast delivery is crucial to cultivating customer loyalty for e-commerce companies like Amazon. However, as economic headwinds have caused demand to wane and shipping costs to rise, last-mile delivery charges are taking a toll on the company’s profitability.
Whether AMZN can easily navigate the ongoing headwinds in the e-commerce business remains a wait-and-watch story. On the other hand, analysts are confident that the slowdown in its cloud business (AWS – Amazon Web Services) is transitory, implying that its high-margin segment’s growth could reaccelerate soon.
On May 8, Loop Capital analyst Rob Sanderson said that the concerns over the slowdown in AWS business are temporary. The analyst sees signs of recovery in the cloud space and expects a reacceleration in AWS’ growth rate.
Sanderson is bullish about AMZN stock and expects the company to benefit from cost-cutting measures.
Along with Sanderson, Mizuho Securities analyst James Lee and Deepak Mathivanan of Wolfe Research are also upbeat about a steady recovery in AMZN’s cloud business.
Is AMZN Stock a Buy or Sell?
AMZN stock sports a Strong Buy consensus rating on TipRanks based on 35 Buys and one Hold recommendation. Analysts’ average price target of $134.24 implies 25.91% upside potential from current levels.
