- Amazon will add around 16MSF of new warehouse space to the U.S. through new leases and purchases to stay competitive.
- The company plans to diversify warehouses and revamp its centralized distribution to accelerate deliveries and cut costs.
- So far, the revamped shipping approach has led to 65% speedier deliveries on a YoY basis.
Amazon (AMZN) is rapidly expanding its U.S. warehouse space to boost delivery efficiency, adding to its 413MSF industrial footprint in North America.
Competing With Everyone
Whether through leasing or buying, Amazon plans to add over 16MSF of new warehouse space nationwide. The massive expansion aims to enhance the company’s already blazing-fast delivery speeds and further reduce shipping costs to rival competitors like Walmart (WMT), Shein, and Temu.
The new facilities will include everything from massive warehouses with large inventory storage to smaller setups for final package delivery staging.
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The e-commerce giant is also reorganizing its domestic shipping network from a centralized to a regional distribution model with nine regions. The revamped network will help expedite deliveries and reduce transportation costs.
Amazon’s efforts to enhance delivery services led to a 65% YoY increase in same-day or next-day deliveries nationwide as of 4Q23. When you can get online products in your hands that quickly, what’s the point of going to the store?
Of course, the plan requires a shift towards decentralized inventory placement, which means multiple storage locations across the country. Amazon’s strategic deployment of inbound receiving centers and rural warehouses as delivery stations aid in efficient last-mile transportation, which is critical for cost-saving measures.
Keeping Up With The Waltons
Amazon’s expansion is partly in response to Walmart’s extensive network of 4,600+ stores for online order fulfillment. The House of Walton has stores within 10 miles of 90% of American consumers, which means Amazon must maintain its targeted logistics growth to stay competitive.
Chinese e-commerce companies are also a growing threat. Growing pressure from popular discount sellers like Shein and Temu means that Amazon has to continuously innovate its logistics infrastructure to remain competitive. Pricing and delivery speed will always dictate consumer choices, and China knows that better than anyone.
Why It Matters
As Amazon doubles its number of same-day fulfillment sites and leases more warehouses in rural areas to minimize final-mile transportation costs, the company is poised to redefine fast shipping once again. This aggressive expansion and strategic restructuring are critical to staying ahead in the competitive e-commerce landscape, ensuring that Amazon can continue to offer quick and efficient delivery to its customers.
