Amazon Doubles Down on Fulfillment Network

Amazon Continues to Bring Delivery In-House

Amazon (AMZN) is becoming a fulfillment behemoth, nearly doubling the number of warehouses it operates over the last 24 months. These moves come as the ecommerce giant’s sales have surged amid the pandemic. Amazon added 450 new fulfillment centers in the past two years to store, pack, and ship items across the country.

Most of the new facilities are located near large cities to serve highly populated areas. The company also added smaller facilities which are stocked with popular items, enabling Amazon to better meet demand amid supply-chain issues. By growing its fulfillment network, Amazon is closer to its goal of delivering items in one day or less without relying on outside shipping companies.

Amazon Ready for the Holidays

Amazon’s bet on expanding its fulfillment capabilities during the pandemic is now benefiting the company. Despite supply-chain delays and worker shortages, Amazon said it is ready and able to deliver products in time for the holidays. Over 98% of packages arriving in Amazon’s delivery facilities are being delivered the following day. Some very in-demand items like sporting goods and household products are being delivered within a few days.

Amazon has been preparing for the holiday season since the start of 2021. While that is preventing any shortages, it does come at a cost. Amazon expects several billion dollars of extra expenses in the current holiday quarter.

Amazon to Open More Centers

While Amazon has long packaged boxes in one warehouse and sorted and shipped them from another, it is now opening all-in-one centers that serve as both fulfilment and delivery. Amazon plans to have about 30 of these hybrid facilities open by the end of the year. The centers, which can store as many as 30 million items, are located near big cities including Atlanta and Chicago. Amazon is expected to open about 150 of these hybrid centers over the next few years.

Worker shortages and supply-chain delays are not preventing Amazon from trying to control all aspects of ecommerce. While the world hunkered down, Amazon continued to build out its fulfillment network. Now, that bet appears to be paying off.

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