Just How Much Time and Money Are Amazon’s Endless Fulfillment Centers Saving?

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Amazon Robotics Kiva
Photo: Amazon’s Kiva robot in action

The statement, “the early bird gets the worm,” is applicable to the e-commerce space, as more giants, like Amazon, are growing their fulfillment fleets to reach consumers first.

Today, Amazon has more than 70 fulfillment centers nationwide. Incorporated with Amazon’s membership services, including Prime two-day shipping and Prime Now one-hour delivery, and proximity to residential areas, the fulfillment centers enable Amazon to reach consumers more quickly than most.

This month, Amazon opened six new fulfillment centers across the country. Located in Thornton, Colorado, North Haven, Connecticut, Fresno, California, Miami, Florida, Jefferson, Georgia and Troutdale, Oregon, the new centers will ramp up Amazon’s delivery process and provide thousands of full-time jobs to nearby communities. Some of the centers will also feature new technology to streamline inventory and packing tasks.

Three fulfillment centers, including those located in Fresno, Jefferson and Troutdale, will serve as facilities that specialize in small and larger-sized items, including books, electronic devices, children’s toys, home improvement tools and household furniture. In addition to their strategic placement, the fulfillment centers bridge the gap between regional sellers and nationwide consumers. Local sellers will be able to reach new shoppers, while consumers will have access to new products regardless of where they are in the U.S.

(Read More about Amazon’s reign over other companies: Amazon Nabs Second Spot on LinkedIn’s Top Companies List)

Innovations, including robotics, will also be used at some of the fulfillment centers. Amazon’s new facilities in Miami, North Haven and Thornton, will integrate humans and robots in the same work environment. The technology will help employees move around inventory, gather items for box placement and pack up packages for delivery.

Another benefit of the fulfillment centers is reduced delivery costs. According to data from the National Bureau of Economic Research (NBER), Amazon’s expansion of fulfillment centers has led the e-tailer to “save between $0.17 and $0.47 for every 100 mile reduction in the distance of shipping goods worth $30.” What’s more, Amazon has minimized total shipping costs by 50 percent, while achieving a higher profit margin of 14 percent over the past 10 years.

While other major players, including Walmart and Target, try to play catch-up, Amazon’s fulfillment center growth will likely leave it the leader of the pack for the foreseeable future.


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