Amazon to add 1,000warehouses
Neighborhood expansion helps e-retailer fend offWalmart, Target.
Amazon.comInc. plans to open 1,000 small delivery hubs in cities and suburbs all over the U.S., according to people familiar with the plans. The facilities, which will eventually number about 1,500, will bring products closer to customers, making shopping online about as fast as a quick run to the store. It will also help the world’s largest e-commerce company take on a resurgent
Walmart Inc.
Amazon couldn’t fulfill its twoday delivery pledge earlier this year when shoppers in Covid-19 lockdown flooded the company with more orders than it could handle. While delivery times have improved thanks to the hiring of 175,000 new workers, Amazon is now consumed with honoring a pre-pandemic pledge to getmany products to Prime subscribers on the same day. So with the holidays approaching, Chief Executive Officer Jeff Bezos is doubling down by investing billions in proximity, puttingwarehouses and swarms of blue vans in neighborhoods long populated with car dealerships, fastfood joints, shopping malls and big-box stores.
Historically, Amazon gnawed away at brick-and-mortar rivals fromwarehouses on the exurban fringes, where it operated mostly out of sight and out ofmind. That worked fine when the company was promising to get products to customers in two days. Now
Walmart and Target Corp. are using their thousands of stores to beat Amazon at its own game by offering same-day delivery of online orders. Walmart also recently started is own Primestyle subscription service, upping the competitive ante.
Beyond Amazon’s retail rivals, the mass opening of small, quick-deliverywarehouses poses a significant threat to United Parcel Service Inc. and theU.S. Postal Service. Being fastest inthe online delivery race is so critical toAmazon’s business that it doesn’t trust the job to anyone else and is pulling back from these longtime delivery partners. Amazon is basically duplicating UPS’s logistics operation. Many ofAmazon’s new hubs are within walking distance of UPS facilities.
“In just a few years, Amazon has built its own UPS,” says Marc Wulfraat, president of the logistics consulting firm MWPVLInternational Inc., whoestimatesAmazon will deliver 67% of its own packages this year and increase that to 85%. “Amazon keeps spreading itself around the country, and as it does, its reliance on UPSwill go away.”
Amazon declined to comment on its expansion plans.