Dive Brief:
- Amazon plans to open 1,000 small delivery hubs in suburban areas across the country, and that number could expand to as many as 1,500, according to Bloomberg.
- The goal of the new facilities will be to reduce wait times for online orders, even to the point of being as quick as driving to the store.
- The online retailer’s expansion plan is in response to brick-and-mortar chains like Walmart and Target taking advantage of their proximity to do same-day delivery or pickups.
Dive Insight:
In an example of Amazon’s expansion, the online retailer recently opened a warehouse in Holyoke, Massachusetts, near 600,000 people. Amazon’s new method is designed to supplement its existing proximity of warehouses for delivery, according to Bloomberg, and in many ways is mimicking UPS’ warehousing model.
The demand for two-day or same-day delivery means new warehouse construction has soared for companies like Amazon, Whole Foods and Walmart. With consumers looking to buy everything from furniture to groceries online, speedy delivery is key to growing revenues.
This has led warehouses to transition from large storage buildings to nerve centers for distribution, and the closer they are to the consumer, the better. In the summer of 2019, several large metro areas, including Chicago and Atlanta, had seen upticks in commercial distribution center construction.
Warehouses continue to balloon in size as well, experts say, as a combination of the larger inventory and the tech requirements to keep products moving quickly through the center and out the door means more square footage. Miles of conveyor belts automatic retrieval are just a few of the solutions to accelerate hundreds of thousands of items shipped daily, which also leads to increasingly lucrative warehouse construction
