Amazon.com, Inc. (NASDAQ:AMZN) stock could really use some good news lately. Since entering 2016, AMZN stock has plunged more than 28%. Luckily, Bloomberg dug up an old report from the company, revealing a plan that could send Amazon stock’s price through the roof.
So, what is this plan?
Well, it all goes back to 2013, when a report was presented to Amazon’s senior management team. The report outlined an aggressive global expansion plan for the company’s “Fulfillment By Amazon” (FBA) service. The FBA service provides storage, packaging, and shipping for vendors selling products on Amazon’s e-commerce platform. (Source: “Amazon Building Global Delivery Business to Take on Alibaba,” Bloomberg, February 9, 2016.)
According to the report, Amazon would build a delivery network that controls the flow of goods around the globe.
“Sellers will no longer book with DHL, UPS or Fedex but will book directly with Amazon,” the report said. “The ease and transparency of this disintermediation will be revolutionary and sellers will flock to FBA given the competitive pricing.” (Source: Ibid.)
Note that the logistics industry is made up of more than just shipping companies. There are quite a few middlemen handling cargo and paperwork in international trade.
Amazon’s plan is to bypass these brokers. In its vision, a merchant in China will be able to send goods to shoppers in the U.S. directly through Fulfillment By Amazon.
Sure, the plan was proposed three years ago and Amazon is yet to make this ambition public. But recent events suggest that the company was indeed expanding its presence in the global logistics business.
In December, Bloomberg reported that Amazon is considering leasing 20 “Boeing 767” wide-body freighter jets. Moreover, the company is buying thousands of truck trailers. (Source: “Amazon Said to Mull Leasing Planes to Control Delivery Chain,” Bloomberg, December 18, 2015.)
Last month, logistics company Flexport reported that Amazon China has registered to operate as an ocean freight forwarder in the U.S. Flexport considered this “Amazon’s first step toward entering the $350 billion ocean freight market.” (Source: “Introducing Ocean Freight by Amazon: Ecommerce Giant Has Registered to Provide Ocean Freight Services,” Flexport blog, last accessed February 9, 2016.)
According to Colin Sebastian, analyst at Robert W. Baird & Co., a global logistics operation could become a $400-billion business for Amazon.
If the company manages to carry out the plans outlined in this ambitious 2013 report, it would give investors a solid reason to become bullish on AMZN stock again.