Amazon will offer a new logistics service to third-party sellers, managing the delivery of goods from factories directly to customers. Amazon stock rose Wednesday on the news.
The e-commerce giant announced the Supply Chain by Amazon service Tuesday, ahead of its annual sellers conference. Amazon said the service will "quickly and reliably move products from manufacturing locations to customers around the world."
The service marks an expansion of Fulfillment by Amazon, which the e-commerce giant launched in 2006. Through that service, Amazon stores, packs and ships products for third-party sellers that use its platform.
Now the company is stepping in earlier and scooping up products straight from manufacturers around the world. Amazon also said it can use machine learning to help manage inventory and keep products stocked.
Following The AWS Playbook
On the stock market today, Amazon stock closed up 2.6% at 144.85.
To one analyst, the service is the latest step for Amazon to offer broad logistics capabilities to businesses. That business could eventually prove similar to the cloud-computing services it offers through the massive Amazon Web Services.
"Slowly but surely, Amazon is replicating the AWS playbook by broadening the availability of its fulfillment network," Wedbush analyst Scott Devitt said in a client note Tuesday.
Multiple Amazon stock analysts in recent weeks have highlighted the strength of the company's fulfillment network as a reason its shares may be undervalued. Amazon's fulfillment infrastructure now spans more than 541 million square feet.
"Amazon is well positioned to broaden the availability of its services to multichannel sellers and non-Amazon merchants," Devitt added.
Amazon Stock: Supply Chain Service Follows Shopify Deal
The supply chain announcement comes less than two weeks after Amazon announced a partnership to fulfill orders for Shopify merchants. Through that deal, sellers on Shopify can offer customers a Buy With Prime option to buy and receive their items.
Amazon launched the Buy With Prime option for sales last year, expanding its reach to sellers outside its platform. Amazon also recently relaunched a shipping services for its sellers that competes with FedEx and United Parcel Service.
All this is adding up to what some have dubbed a logistics-as-a-service business.
"We believe Amazon has developed core competencies in logistics, with scale efficiencies that can be capitalized on through a LaaS business," Bank of America analyst Justin Post said in a client note Tuesday. "Today's announcement follows numerous press releases in the past 30 days suggesting the company is ramping its LaaS offering ... the next potential service model for Amazon following 3P (third-party) retail, Cloud, and advertising."
Amazon stock entered trading Wednesday up by 68% on the year.
