Amazon to Grow in Kansas with Edgerton Fulfillment Center

Amazon.com Inc. AMZN recently announced its plan to open a fulfillment center in Edgerton, KS. The company currently operates facilities in Lenexa, KS.

The Edgerton facility, spread across an area of more than 800,000 square feet, will create 1,000 plus full-time jobs. The new facility will focus more on picking, packing and shipping larger items, such as big-screen televisions, sports equipment and kayaks, to name a few.

The world's largest online retailer stated that it offers better-than-industry-standard salaries, including healthcare and other full-time benefits like health insurance and 401(k) retirement plan. In addition, the retail giant offers bonuses and company stock awards.

Amazon plans to expand its fulfillment centers across the country. In the recent months, the company has been spending heavily to ensure on-time delivery of goods and reduce logistics costs by adding a fleet of cargo trucks and opening smaller distribution centers to handle last-minute deliveries to customers' doorstep.

Fulfillment centers are giant warehouses that help online retailers to store and ship products, and handle returns quickly. These are important for offering the level of service that Amazon's customers have gotten used to.

The need to expand fulfillment centers is rising because of the ever-increasing demands of online shoppers. Prompt and accurate delivery is integral to the success of an online retailer.

Third-party retailers also use Amazon's warehouses and shipping services. Small retailers that are unable to provide relatively cost-efficient shipping are also signing up for its fulfillment services to boost revenues and drive expansion.

In our view, Amazon must maintain the U.S. market share while expanding globally to retain the leading position. For this, the company needs to invest more in fulfillment as well as technology and content, especially in the international markets with lesser penetration but higher growth rates.

Though the increased expenses could hurt the company's bottom line in the near term, we believe that these are necessary to maintain its dominance in this highly competitive market in the long run.

Currently, Amazon has a Zacks Rank #3 (Hold).

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