Amazon is using its fulfillment network to fend off rivals

Amazon’s fulfillment network received some attention this week after GlobeSt reported that the company signed at least six new leases in the first five months of the year, representing the space it signed leases for in all of 2023. All six were for area in the western part of the country. Two days later, the Wall Street Journal, in an article titled “Amazon resumes its logistics expansion and reshapes its U.S. distribution,” stated that Amazon’s “post-pandemic slowdown in logistics expansion” is over – The country’s largest e-commerce retailer is leasing more warehouse space in an attempt to speed up deliveries, a response to growing competition.”

The Journal referred to the fact that pandemic-related demand strained Amazon’s resources in 2020, with the company revealing in November 2021 that it had doubled production capacity as a result, but by June 2022 there were reports that ​​the company found excess capacity due to online expenses paid.

Pymnts referenced this week’s Journal article and extracted the following statistics:

Amazon operates 413 million square feet of industrial real estate, which it plans to expand by another 16 million square feet.

Amazon Logistics is now divided into 9 regions. (Amazon announced its decision to decentralize its fulfillment network across 8 regions in April 2023.) Decentralization requires third-party sellers who use FBA to store inventory in multiple locations.

Amazon rents smaller warehouses in rural areas to serve as delivery stations, minimizing last-mile transportation costs.

Citing the Journal’s reporting, Pymnts said Amazon’s decision to decentralize its network last year and expand it this year was partly a response to Walmart’s use of stores to fulfill online orders and partly a response to competitive pressures from Temu and Shein.

Amazon described the types of facilities that make up its fulfillment network on AboutAmazon.com, for readers interested in learning more about where their inventory might go:

Sortable order fulfillment center
Fulfillment centers measuring approximately 800,000 square feet can employ more than 1,500 full-time employees. In these buildings, Amazon workers pick, pack and ship customer orders such as books, toys and household items. Thanks to Amazon Robotics innovations, associates frequently collaborate with robots, allowing them to learn new skills and helping create a more efficient process to meet customer demands.

Unsortable fulfillment center
Unsorted fulfillment centers range in size from 600,000 to 1 million square feet and employ more than 1,000 full-time employees. At these centers, workers select, pack and ship customers’ bulky or larger items, such as outdoor furniture, garden equipment or rugs.

Sorting centers
At sortation centers, workers sort customer orders by destination and consolidate them onto trucks for faster delivery. Amazon’s network of sorting centers provides full- and part-time career opportunities and supports our ability to provide customers with the daily deliveries, including the Sunday deliveries that customers love.

Pickup centers
Amazon’s fulfillment centers support customer order fulfillment by accepting large orders for the types of inventory we believe will sell quickly and allocating them to fulfillment centers across the network. Full- and part-time positions are available in the approximately 600,000-square-foot buildings.

Specialty
Amazon’s fulfillment network is also supported by additional building types that serve specific categories of goods or are activated during peak times of the year, such as the holiday season. Many of these buildings offer part-time opportunities with the option to transition to full-time.

Delivery stations
In these buildings, customer orders are prepared for delivery to customers at the final stage. Amazon service providers enable us to ship quickly, every day.

Ina Steiner

Ina Steiner is the co-founder and editor of EcommerceBytes and has been writing articles on e-commerce since 1999. She is a widely cited authority on marketplace sales and author of Turn eBay Data Into Dollars (McGraw-Hill 2006). Her blog was featured in the book “Blogging Heroes” (Wiley 2008). He is a member of the Online News Association (September 2005 – present) and Investigative Reporters and Editors (March 2006 – present). Follow her on Twitter at @ecommercebytes and send news tips to [email protected]. See the disclosure at EcommerceBytes.com/disclosure/.