the staff of the Ridgewood blog
Ridgewood NJ, ever wonder how Amazon feels about the progress other retailers are making online? Now we know.
After a roughly two-year hiatus, Amazon is aggressively expanding its warehouse and logistics network again, according to a report from The Wall Street Journal. This move comes as a response to Walmart’s e-commerce advancements and the rise of discount online sellers Shein and Temu.
Same-Day Some-Days
Amazon significantly expanded its logistics and warehouse operations during the pandemic, as e-commerce sales surged from around 10% to nearly 17% of total US purchases, according to Census Bureau data. In just 24 months, the e-commerce giant doubled the size of its fulfillment network. However, this rapid growth led Amazon to pause further expansion for the next two years.
In the meantime, Walmart has transformed its e-commerce strategy, utilizing its 4,700 US locations as makeshift e-commerce fulfillment centers. Additionally, China-based Shein and Temu have entered the US market with ultra-cheap goods, putting pressure on Amazon in terms of both price and delivery speed. This competitive landscape has prompted Amazon to reinvigorate its logistics network:
- Amazon has either leased, bought, or announced the addition of 16 million square feet of warehouse space this year, according to MWPVL International, a Canada-based supply-chain consulting firm. The company already owned 413 million square feet of industrial space in North America, based on company filings.
- Beyond just expansion, Amazon has restructured its logistics network to prioritize regional distribution over centralization. This strategic shift is aimed at enhancing its capacity for rapid delivery. Some of the new facilities added this year are specifically designed for the final stages of quick delivery, as reported by the WSJ.
Work It: Challenges and Solutions
Expanding its logistics footprint likely means expanding its logistics labor force, too. However, this is no easy task. In its first-quarter earnings report in 2022, Amazon admitted to possibly over-hiring in its warehouses to meet rising demand. A leaked memo obtained by Vox revealed internal company research suggesting that Amazon might “deplete the available labor supply in the US network by 2024.” Additionally, an investigation by The New York Times found that the annual employee turnover rate at Amazon’s warehouses had reached an astonishing 150%.
Given these challenges, it’s no surprise that Amazon is increasingly turning toward automation, including the use of humanoid robots, to maintain its logistics operations.
As Amazon continues to navigate the competitive e-commerce landscape, its latest expansion efforts underscore the company’s commitment to maintaining its dominance in the industry. With new strategies and technologies, Amazon aims to stay ahead of the curve, ensuring that it can meet the evolving demands of its customers.
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Amazon should be shut down. Those trucks are all over the place. Go to the store sometimes.