World’s largest online retailer and technology provider, Amazon is believed to have set its sights on revolutionizing logistics, with the potential to create a business worth over $100 billion, says Truist Securities analyst Youssef Squali.

Amazon is exploring the idea of offering its well-established shipping and distribution services to businesses beyond its own operations, and this move, if successfully executed, could transform what was once a significant cost into a major moneymaker. Amazon’s goal is to further boost its already successful e-commerce business and increase profits.

Investors have taken notice of Amazon’s logistics ambitions, as evidenced by a remarkable 58% rise in its stock value this year. This boost is mainly due to Amazon’s efforts to cut costs, which have significantly increased its profits. The surge in online shopping during the COVID-19 pandemic led Amazon to invest in things like warehouses to meet growing demand. By expanding its logistics services and offering its capabilities as a service, Amazon is poised to generate even more revenue, with a projected 11% increase, reaching $570 billion in 2023.

Amazon’s “Supply Chain by Amazon” initiative aims to streamline various aspects of the supply chain process, from ocean freight and customs to ground transportation and inventory storage. This strategy is reminiscent of Amazon’s success with Amazon Web Services (AWS), where it initially created  and leveraged its robust cloud and data center capabilities to lay the foundation for AWS, creating a game-changing cloud computing platform for its own use, before opening it to other businesses and revolutionizing the tech industry.

Amazon’s move into logistics is a natural step, building on its two main pillars: AWS and retail. While Amazon’s value has slightly dipped since the previous year, it still has a premium value compared to other tech giants, with a valuation at 34 times projected earnings for the next 12 months.

Despite its valuation, Amazon remains a favorite on Wall Street, with most analysts recommending buying its stock. The average price target for the stock suggests a 31% gain in the next year.

While it may take some time for Amazon’s logistics expansion to reach its full potential, it is seen as a strategic move that could pay off in the coming years. Investors and analysts are looking at Amazon’s long-term growth potential, especially in 2024 and 2025.