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Here's What Amazon Stands to Gain by Building Out Its Own Delivery Network

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As Amazon.com (AMZN - Get Report) takes more significant steps to build out its own transportation and logistics capabilities, the dividends could well be significant, analysts say.

On Thursday, the e-commerce giant announced that it had partnered with Atlas Air Worldwide (AAWW - Get Report) to support its deliveries to customers. The long-term commercial agreements will include the operation of 20 converted freighters by Atlas for Amazon for 10 years. Operations will start in the second quarter and are expected to be ramped up by 2018.

Shares of Amazon were up 0.86% on Monday to $647.75.

"Shipping is one of the most burdensome costs for retailers like Amazon," said Frederick Moran, director of research at Burke & Quick Partners, via phone Monday, adding that Amazon handling shipping directly could be a smart, long-term way to grow profitability.

Must Read: As Amazon Goes Into Air Delivery, Is It Time to Sell FedEx, UPS?

Going the direct route could mean that Amazon may control its shipping cost structure as well as its ability to deliver packages on a timely basis, Moran added.

"Doing it direct does potentially add extra cost in the short term. But time again and again, we've seen Jeff Bezos be willing to add...


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