September 30, 2014

Amazon expands warehouses, should anticipate more problems in the U.S. and Eastern Europe


Scott Wingo, CEO of Channel Advisor, has been investigating the spread of Amazon Fulfillment Centers on his blog. He noticed he was getting next-day shipments even when he hadn’t requested them, and that the packages were arriving from closer and closer addresses. We’ve discussed Amazon’s plan to read minds predict your order before you place it here before.

Wingo created an interactive map so you can see the alarming growth. Green markers are operational fulfillment centers with their fulfillment center designators; wrenches are fulfillment centers that are under construction; blue stars are sortation centers. If you’re not familiar with sortation centers, they’re “a newer type of facility, typically smaller than fulfillment centres, where orders are sorted in-house rather than by a partnering shipping company,” according to Jason del Ray of Re/Code.

Wingo points out the biggest areas of growth:

Marie Szaniszio of The Boston Herald reported yesterday that Stoughton, Massachusetts is giving Amazon a $3.5 million tax break for creating 125 jobs.

Brad Stone, author of The Everything Store, wrote in BusinessWeek that he thinks Amazon is motivated by the UPS melt-down last holiday season, when a combination of high online orders, not enough employees, and severe weather meant a lot of packages didn’t arrive until after the holidays.

Amazon has to cut out UPS, because there’s nothing worse in Amazon’s mind than a middleman. Shipping costs are lower if the warehouse is nearby, and there’s an obvious advantage in anticipating new orders.

More warehouses means more employees, though, and this is Amazon’s weak spot. It has failed to invest in the good of its people, from warehouse meltdowns to union strikes. If the company continues to invest in Germany and Eastern Europe, it needs to deal with the unions that have been protesting for more than a year.

Correction: An earlier version of this article stated that Massachusetts was given a $3.5 billion, not $3.5 million, tax break.

Kirsten Reach is an editor at Melville House.