Amazon (AMZN 3.43%) has been a big winner for early investors, with the stock soaring more than 147,000% since its IPO. In recent years, however, fears of slowing growth and limited expansion opportunities have weighed on the stock, which is still down 22% from its pandemic-era peak.
In 2022, Amazon's net sales increased just 9% year over year, while its operating income was cut in half. While the results were undoubtedly affected by the economic downturn, that offered little solace to investors who feared its growth story was waning.
However, recent announcements by Amazon hint at several significant opportunities beyond its core e-commerce and cloud infrastructure businesses. And the evidence suggests the company's growth is far from over.
Image source: Amazon.
1. Supply Chain by Amazon
Earlier this week, the company introduced Supply Chain by Amazon, the next logical step in its Fulfillment by Amazon service. The company described this new offering as "an automated solution to help sellers quickly and reliably ship products around the world." Amazon is leaning into its advanced logistics, fulfillment, and delivery expertise to create an "end-to-end solution that will help sellers through their entire supply chain and across all their sales channels, including online and physical stores."
Merchants that use the service can task Amazon with picking up and delivering inventory from production and manufacturing facilities around the globe, handling cross-border traffic, navigating customs and duties, and arranging ground transportation, among other tasks.
The company noted that merchants using Amazon's Global Logistics realize discounts of up to 25% when combined with Amazon Warehousing Distribution (AWD), the company's low-cost inventory storage offering. What's more, combining this service with its Partnered Carrier Program can streamline the shipping process, saving sellers additional money.
These services provide compelling opportunities for Amazon to expand its logistics and fulfillment business while helping sellers save money -- a rare win-win.
2. Buy With Prime
On Thursday, the company touted the latest updates to Amazon's Buy with Prime. The service, which debuted last year, "allows U.S.-based Prime members to shop directly from participating online stores using the Prime shopping benefits they love and trust -- including fast, free delivery, a seamless checkout experience, and easy returns."
The latest feature, Buy with Prime Cart, expands the service beyond single products, allowing shoppers to buy multiple products in a single transaction. Initial results show that merchants that added the Buy with Prime Cart experienced a 15% increase, on average, in the number of units sold per order. This also helps reduce delivery costs because Amazon can fulfill multiple product orders in a single shipment.
This follows the surprise announcement late last month that Amazon was partnering with Shopify (SHOP 1.11%) to offer Buy with Prime to merchants on Shopify's platform. A soon-to-be-released app will "offer Prime members fast, free delivery ... outside Amazon for the first time ever."
It's estimated that Shopify has more than 2 million merchants in more than 175 countries on its platform. By integrating Buy with Prime into its ecosystem, Shopify merchants can boost sales. Amazon noted that initial results show that 75% of Buy with Prime orders are from new shoppers, which helps merchants increase sales and their customer base.
3. A "healthy" director appointment
Finally, in a regulatory filing that dropped Wednesday, Amazon announced it had elected Brad Smith to its board of directors and appointed him to the board's audit committee. Smith currently serves as the president of Marshall University, but other parts of his resume should be of interest to Amazon investors.
Smith spent 19 years with Intuit, with most of that time as chairman and CEO. During his tenure, he doubled the company's revenue and oversaw a stock price increase of more than 500%. He also currently serves on the board of directors at health insurer Humana, a position he's held since September 2022.
It's likely no coincidence that Amazon would seek out a director with experience in the healthcare industry, as the company has been working to expand its opportunity in the field for several years.
DA Davidson analyst Tom Forte said the appointment and Smith's background will provide Amazon with a unique perspective. "Given his long tenure at Intuit, we believe Amazon may appreciate his differentiated vantage point on healthcare, versus another potential director whose background was solely healthcare," he wrote. "It is likely consistent with the company's view that it intends to exploit the healthcare opportunity through an emphasis on its acumen in technology."
Given Amazon's expansion into primary care and its recent acceptance by Blue Shield of California to provide prescription drugs, appointing Smith to its board could help advance the company's healthcare ambitions.
Lots to like
To be clear, there are plenty of reasons to like Amazon right now. Its e-commerce business will get a boost from the improving economy. Amazon Web Services (AWS) -- its cloud infrastructure service -- is working to expand its artificial intelligence offerings, which will serve as a strong secular tailwind. The company continues to increase its share of the digital advertising market. All this while Amazon stock is selling for a song, at just 2 times forward sales.
These recent announcements suggest that Amazon is venturing further outside its three core businesses to fuel its future growth, which indeed seems like a compelling strategy.
