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Amazon (AMZN) Is Officially a Transportation & Logistics Company

January 29, 2016 1:48 PM EST
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Price: $174.48 +0.03%

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Amazon (NASDAQ: AMZN) just provided the most telling clue that it is encroaching on FedEx's (NYSE: FDX) and UPS's (NYSE: UPS) turf in Transportation & Logistics.

For the first time, the company described itself as a "transportation service provider" in its 10-K filing with the SEC, Baird analyst Colin Sebastian pointed out.

Under Cost of Sales the company disclosed (highlight ours):

"Cost of sales primarily consists of the purchase price of consumer products, digital media content costs where we record revenue gross, including Prime Video and Prime Music, packaging supplies, sortation and delivery centers and related equipment costs, and inbound and outbound shipping costs, including where we are the transportation service provider. Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our customers."

The disclosure is not an entirely new revelation, just a confirmation of what was already being speculated about. In fact, Sebastian had hypothesized that Amazon would enter the Transportation & Logistics market for months.

"We continue to expect Amazon to add logistics primarily to meet its own growth, but over time, and in incremental fashion, we believe it is likely that Amazon will offer this expertise to third parties to help subsidize those costs," the analyst said.

The firm maintained an Outperform rating and price target of $710 on AMZN.

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $635.35 yesterday.



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Robert W Baird