September 30, 2014
Amazon expands warehouses, should anticipate more problems in the U.S. and Eastern Europe
by Kirsten Reach
Scott Wingo, CEO of Channel Advisor, has been investigating the spread of Amazon Fulfillment Centers on his blog. He noticed he was getting next-day shipments even when he hadn’t requested them, and that the packages were arriving from closer and closer addresses. We’ve discussed Amazon’s plan to
read minds predict your order before you place it here before.
Wingo created an interactive map so you can see the alarming growth. Green markers are operational fulfillment centers with their fulfillment center designators; wrenches are fulfillment centers that are under construction; blue stars are sortation centers. If you’re not familiar with sortation centers, they’re “a newer type of facility, typically smaller than fulfillment centres, where orders are sorted in-house rather than by a partnering shipping company,” according to Jason del Ray of Re/Code.
Wingo points out the biggest areas of growth:
- State based (FL, CA, GA, NY/NJ) expansion: Amazon has been making deals with states for online tax collection.
- Eastern Europe: Amazon is building out several FCs in Poland.
- Western Europe: There are rumors that Amazon has its eye on the Netherlands as a possible new market.
- Sortation centers – As mentioned there are plans to build 15 in the US for Holiday 14.
- India – there is one FC operational and we have found reports of 4 more being built which signals a pretty significant buildout.
Marie Szaniszio of The Boston Herald reported yesterday that Stoughton, Massachusetts is giving Amazon a $3.5 million tax break for creating 125 jobs.
Brad Stone, author of The Everything Store, wrote in BusinessWeek that he thinks Amazon is motivated by the UPS melt-down last holiday season, when a combination of high online orders, not enough employees, and severe weather meant a lot of packages didn’t arrive until after the holidays.
Amazon has to cut out UPS, because there’s nothing worse in Amazon’s mind than a middleman. Shipping costs are lower if the warehouse is nearby, and there’s an obvious advantage in anticipating new orders.
More warehouses means more employees, though, and this is Amazon’s weak spot. It has failed to invest in the good of its people, from warehouse meltdowns to union strikes. If the company continues to invest in Germany and Eastern Europe, it needs to deal with the unions that have been protesting for more than a year.
Correction: An earlier version of this article stated that Massachusetts was given a $3.5 billion, not $3.5 million, tax break.
Kirsten Reach was an editor at Melville House.