Amazon could be looking to add comprehensive last-mile warehouse coverage to major markets on a heretofore unheard-of scale.
Having largely recovered from the shipping delays precipitated by the outbreak of the coronavirus, Amazon is on a quest to open as many as 1,500 smaller-format distribution centers in urban and suburban markets, Bloomberg reports. Called “delivery stations,” these 200K SF facilities would be around a quarter of the average size of Amazon’s “fulfillment centers” that tend to be in more traditional industrial areas.
Amazon’s real estate frenzy is already well underway, and it goes beyond distribution centers. In September alone, the company estimates it will open 100 new facilities, between warehouses, offices, data centers and retail concepts. In Q3 2019, the company reported a 26% year-over-year decline in profits and attributed it to prodigious spending on its last-mile network.
Part of Amazon’s voracious appetite for last-mile space comes from its desire to make one-day delivery the new standard for Amazon Prime members, and to up the ante to same-day delivery where possible. After that initiative was derailed by the combination of coronavirus-related work restrictions and lockdown-driven e-commerce growth, Amazon believes it is back on track in shrinking its delivery expectations, Bloomberg reports.
The urgency in achieving that higher standard comes in part from competitors like Walmart (and to a lesser extent, Target) improving at leveraging their physical store footprint to make same-day deliveries. Without that retail infrastructure, Amazon is attempting to compete by using the disappearance of big-box retailers to its advantage.