uRBAN WAREHOUSING ACCORDING TO AMAZON

Last update on April 19th, 2023 by Camille Horvath

In 2021, for the United States, the logistic footprint of Amazon represents 302.6 million square feet of logistics equipment and warehouses, or 28.1 million square meters, and more than 144.6 million square feet of projects, or 13.4 million square meters planned (2021-2024).

Amazon dominates the e-commerce market, while also being the second-largest market player in retail behind Walmart. Their vertical integration and efficient supply chain management have resulted in significant revenue and sales growth, aided by the Covid-19 pandemic. Amazon's logistics system is organized around interlocking warehouses, logistics equipment, and proprietary transport services, including a fleet of cargo planes. The company is shifting its strategy towards direct ownership and control of most aspects of the supply chain, reducing its dependence on third-party providers and achieving a shorter click-to-door time than the industry average. Amazon warehouses are listed from 9 warehouse categories.

Fulfillment and Distribution Centers are large centers that handle online orders and can range from 500 000 to 2 million square feet in size. Many of these centers are being partially or fully automated and expanded, both within the existing building and outside. The centers can also be specialized by product type or handling and packaging, such as "small sortable" for small products under 10 kilos, "large sortable" for bigger products between 10 and 25 kilos, or "large non-sortable" for heavy or bulky items like furniture or TVs. As of September 2021, there are currently 264 facilities and 106 projects in progress. Amazon's distribution centers are the largest part of its spatial footprint, covering 184.8 million square feet (17.1 million m²), or nearly 61% of its total warehouse space. Distribution centers also account for 49.4% of the total planned space.

Amazon has two types of small last-mile delivery centers called Delivery Stations (Packages) and Delivery Stations (Heavy/Bulky). These facilities serve as distribution locations for delivery drivers picking up packages or as final delivery locations for orders not intended for home delivery. They are the most represented type of warehouse, with 454 of them dispersed across the country and another 275 projects in 2021.They are the most local link in Amazon's logistics system and there are many in urban and suburban areas for third-party carriers, Amazon delivery agents and customers. Some of these locations also serve as pick-up points, including Amazon locker banks. Delivery stations allow servicing specific urban markets and neighbourhoods. They are the most common facility, with an average size of 11,454 m². Delivery stations have large parking lots where about 20 trucks arrive every night to drop off parcels. These parcels are loaded into hundreds of vans each morning, while hundreds more Amazon Flex drivers who use their private cars arrive in the afternoons to deliver what is left. A typical delivery stations generate more than 1,000 vehicle trips each day (Soper, 2020).

The Pantry/Fresh Food Fulfillment Centers specialize in managing orders for perishable and fresh food products as well as cleaning products. Whole Foods Retail Grocery Delivery Centers act as both supermarkets and distribution centers for the Whole Foods chain and online orders. Prime Now Hubs are local delivery hubs located in densely populated metropolitan areas, dedicated to providing express and premium deliveries. Amazon Prime hubs are small, with an average of 4,087 m2, allowing for high demand items to be delivered within 48 hours (Rodrigue, 2020). Inbound Cross Dock Centers process imported goods near major multimodal hubs. Regional Sortation Centers sort packages for a given region and redistribute them to local links in the supply chain. Air Gateways refer to facilities located near or within airports that handle cargo pallets for air cargo services from or to major distribution centers and pooling centers. These facilities operate based on the hub-and-spoke organizational principle (Rodrigue, 2020).

In Europe, Amazon Prime operates in London, Paris, Berlin and Milan, next to a few other cities. In Paris, Amazon opened its first Amazon Prime hub in 2016 in the 18th arrondissement. It is the only facility of its kind in France (Assémat, 2019). The hub, converted from a warehouse from Geodis, is dedicated to deliver to Paris and twenty immediate nearby cities in one or two hour. With its 4,000 m², it stores twenty-six categories and more than 20,000 references of products. It is organised much more like an urban grocery store. As of 2023, Amazon has eight distribution centers and 33 warehouses in France, while the UK and Germany have 22 distribution centers each.

Amazon's impressive logistical system is a reflection of the company's rapid growth over the past few decades. According to Rodrigue's analysis from 2020, Amazon has gone through four distinct phases of growth. In the first phase, which started in 1995, Amazon entered the niche market of e-commerce (1) when the internet economy was still in its infancy. During this time, the company had limited distribution centers and only offered digital products, books mostly. The second phase, which began in the mid-2000s, marked a shift in Amazon's business strategy. The company rapidly diversified its product offerings to include electronics, toys, cosmetics, and clothing (2). During this time, Amazon expanded its logistics system to become a dominant e-commerce platform. This expansion included an increase in the number of distribution centers and the opening of the first Inbound Cross Dock for imported goods. Starting in 2010, Amazon implemented an aggressive growth strategy in response to the rapidly growing demand for online shopping in the US. To achieve this, the company opened a large number of distribution centers throughout the country and gradually specialized its warehouses with the opening of Sortation Centers, Delivery Stations, and the first local hubs for the Prime Now premium service (3). Finally, since 2016, Amazon has made three major changes to its logistics system. These include a change of scale with the opening of a large number of warehouses, particularly large distribution centers, making Amazon the dominant player in the US e-commerce sector. Amazon also increased the specialization of its warehouses and implemented a strategy of vertical integration (4), giving the company greater control over the entire distribution and transport chain and reducing its dependence on third-party carriers like UPS and FedEx. Amazon delivers about 67% of its parcels in 2020 and aims to increase that share to 85% (Soper, 2020).