Amazon (AMZN) has undergone a remarkable metamorphosis from a humble online bookseller to the world’s most dominant ecommerce platform, expanding into everything from cloud computing and grocery retail through Whole Foods to entertainment production and smart home technology.
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Tied closely to that transformation is Amazon’s rapidly evolving logistics business, which has turned into something of a monster – a vast and sophisticated network capable of handling everything from same-day deliveries to long-distance shipping at an immense scale. This logistics powerhouse is no longer just a support function but a strategic growth engine in its own right.
During the Covid-19 pandemic, Amazon doubled its fulfillment network and built a last-mile delivery system comparable to UPS. Now, the tech giant is once again extending its logistics reach, rolling out a new sortation network aimed at improving speed and efficiency for long-distance shipments.
These logistics improvements have paved the way for a more regionalized fulfillment structure across the U.S., driving notable gains in efficiency and helping reduce Amazon’s cost-to-serve for the second consecutive year in 2024. In the first quarter of 2025, unit volume surged by 8% year-over-year, well ahead of the 3% rise in shipping costs, signaling that these cost efficiencies are holding steady.
This ongoing evolution in logistics has not gone unnoticed on Wall Street. Observing these moves, J.P. Morgan’s Doug Anmuth, an analyst ranked among the top 1% of Street stock pickers, sees Amazon’s Logistics-as-a-Service (LAAS) as the company’s emerging “next pillar.”
According to Anmuth, Amazon Logistics (AMZL) now handles more than 66% of package deliveries, despite 61% of those units coming from third-party sellers. As UPS, which manages roughly 15% of Amazon’s shipping volume, begins to shift some shipments away, AMZL is well-positioned to capture that demand. Moreover, Amazon is rapidly expanding its same-day and one-day delivery (SD1D) coverage to over 4,000 smaller cities, towns, and rural areas by year-end, giving it access to tens of millions of new customers. So far in 2025, SD1D deliveries in the U.S. are up more than 30% compared to last year.
In preparation for this growth, Amazon plans to invest $4 billion by 2026 to scale its rural delivery network. That investment is expected to enable the company to deliver an extra one billion packages annually across 13,000 zip codes covering 1.2 million miles, expand its delivery station footprint to over 200, and triple its rural delivery capacity.
These efforts are already bearing fruit. According to Pitney Bowes, Amazon Logistics delivered approximately 6.3 billion packages last year, representing around 28% of the total 22 billion U.S. parcels shipped in 2024. That performance puts Amazon ahead of FedEx and UPS, and closing in on the USPS’s 31% market share of 6.9 billion packages.
In addition, Amazon has broadened its reach in multi-channel fulfillment (MCF) and Logistics-as-a-Service through initiatives such as Amazon Shipping, Supply Chain by Amazon, Amazon Warehousing & Distribution (AWD), and Buy With Prime for all U.S.-based merchants — further cementing its logistics leadership.
“These initiatives should expand AMZN’s reach, unlock logistics volume, & support L-T FBA pricing power & 3P Seller Services revenue growth,” Anmuth added.
All of this underpins Anmuth’s view that Amazon remains his “best idea,” as he reiterated an Overweight (i.e., Buy) rating with a $240 price target, suggesting a 7.5% upside from current levels.
Barring a lone skeptic, all 47 other recent analyst reviews for AMZN are also positive, backing up a Strong Buy consensus rating. Based on the $243.24 average price target, Amazon’s shares could be trading at an 11% premium a year from now.(See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.