Amazon's September 12 announcement of Supply Chain by Amazon is a significant improvement for multi-channel sellers and positions the company to monetize incremental volume through its existing assets, Wedbush analysts wrote in a client note.
The expansion of its logistics network will allow Amazon's selling partners to move their products in bulk from its low-cost storage service, Amazon Warehousing Distribution (AWD), to any sales channel, including physical stores and warehouses, instead of only directly to consumers’ doorsteps.
The analysts noted that Amazon is leveraging existing infrastructure. With its physical distribution network more than doubling in size over the past three years, they said the e-commerce giant is well positioned to broaden the availability of its services to multi-channel sellers and non-Amazon merchants.
“Slowly but surely, Amazon is replicating the AWS (Amazon Web Services) playbook by broadening the availability of its fulfillment network,” the analysts wrote.
“The result should be simpler and more affordable supply chain management for sellers across both online and physical channels, incremental revenue opportunities for Amazon, and faster delivery times for customers.”
Currently, MCD is running as a pilot program with an initial set of sellers, and it is expected to be available to all sellers later this year.
“We believe Supply Chain by Amazon is a significant improvement for multi-channel sellers and positions Amazon to monetize incremental volume through its existing assets,” the analysts said.
Wedbush has an ‘Outperform’ rating and a 12-month price target of $180 for Amazon.
The company’s shares were steady at $145 at midday on Thursday.
Contact the author at stephen.gunnion@proactiveinvestors.com