Reports suggest the company is expanding its already significant reach.
Shares of Amazon (AMZN 2.50%) climbed higher on Wednesday, adding as much as 3.4%. As of 12:46 p.m. ET, the stock was still up 2.7%.
The catalyst that sent the e-commerce titan higher was a report that Amazon is increasing its already expansive one- and two-day delivery options into underserved parts of the U.S.
Cementing its lead
Amazon is working to expand its delivery empire into the most rural parts of the U.S. in a bid to increase sales in less densely populated areas, according to a report in The Wall Street Journal. In recent months, it has been working to optimize its delivery and logistics services to more quickly reach a greater percentage of the population, particularly in more out-of-the-way places.
To better serve rural customers, Amazon will tweak its practices, “using hyperefficient warehouses, contracted drivers, and mom-and-pop shops,” according to the report. The company is experiencing growing demand in more remote areas and believes that by speeding up its delivery services, it can further increase that demand.
Reaching 100% of the country simply isn’t practical, but Amazon is now trying to reach roughly 90% of U.S. customers. In a statement, the company said these efforts “will help cut delivery times for customers in smaller towns and more isolated parts of the country.”
Increasing its advantage
When it comes to digital retail, Amazon has no equal, accounting for approximately 38% of U.S. online retail sales last year. For context, that’s more than its next 15 largest rivals combined, according to data supplied by eMarketer.
Not only is Amazon the leader in e-commerce, but it’s also the top dog in cloud computing, controlling roughly 31% of the market in the first quarter, according to research company Canalys. This cloud dominance also gives Amazon a key advantage in the generative artificial intelligence (AI) revolution as a purveyor of cloud-based AI software and solutions. It’s worth noting that AI stocks are also rallying, which likely helped fuel Amazon’s rise today.
Finally, at roughly less than 3 times sales, Amazon is attractively priced, particularly considering the multiple ways in which the company can grow. That’s why Amazon stock is a buy.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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