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Supply Chain News: Coming to Mall Area Near You – a Amazon Mini-Fulfillment Center


Amazon to Open more than 1000 Local Delivery Stations Close to Communities to Support Rapid Delivery

Sept. 22, 2020
SCDigest Editorial Staff

In early August, SCDigest reported that he US' largest mall operator, Simon Property Group, was in discussions with Amazon to have the etailer move local fulfillment operations into now empty former JC Penney and Sears stores.

That story noted that "A deal with Simon would be consistent with its on-going strategy to develop more distribution nodes close to residential areas to support rapid deliveries such as same-day or next day." (See Will Malls See Partial Salvation as Amazon Fulfillment Centers?)

Supply Chain Digest Says...

Amazon is also said to be especially targeting consumers who need products now but would prefer not to go to a retail store for convenience or virus protection reasons.

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Now, there is more news on the front, with a report from Bloomberg last week that Amazon plans to open 1,000 or even more small delivery hubs in cities and suburbs all over the country.

The facilities will be mini-fulfilment centers, and serve as what Amazon calls "deliver stations," where its own local delivery drives come to pick up their deliveries for the day.

Eventually the number these local facilities could rise to as many as 1,500, as Amazon aims to move inventory closer to customers.

The Bloomberg article says that "Amazon is now consumed with honoring a pre-pandemic pledge to get many products to Prime subscribers on the same day, adding that with the holidays approaching, Chief Executive Officer Jeff Bezos is doubling down by investing billions in proximity, putting warehouses and swarms of blue vans in neighborhoods long populated with car dealerships, fast-food joints, shopping malls and big-box stores."

Amazon has long been known to put its giant fulfillment centers in areas on the fringes of cities, often nearly out of site. That has changed a bit in recent years, with Amazon opening some small warehouses in urban locations to speed last mile delivery. It has even placed large FCs on sites formerly occupied by now closed suburban shopping malls.

But now to support one-day and even same-day deliveries, Amazon appears for really the first time ready to put smaller FCs right near suburb communities.

With eventually more than 1000 of these mini-FCs, Amazon can cut the local advantage of rivals such as Walmart and Target, which can both leverage their brick and mortar stores to support e-fulfillment, either using buy on-line, pick up in-store or direct deliveries from the store base.

Bloomberg notes that in addition to seeking to blunt some of its retail competitors' advantages, such a move to 1000-plus local FCs poses a significant threat to UPS and the US Postal Service, Amazon's two main parcel carriers, after FedEx walked away from Amazon business in 2018.

Much of the value these carriers bring is in their networks that carry goods from often distant warehouses to consumers' homes.

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But Amazon would move inventory to these local hubs using full truckload or less than truckload carriers. It could then handle the last mile delivery itself for the short trips to surrounding communities using its Amazon Flex or Amazon Delivery Service Partners resources.

"In just a few years, Amazon has built its own UPS," Marc Wulfraat, president of the logistics consulting firm MWPVL International, told Bloomberg. Wulfraat estimates Amazon will deliver 67% of its own packages in the US this year and will eventually increase that to 85%. "Amazon keeps spreading itself around the country, and as it does, its reliance on UPS will go away."

With the move, Amazon is also said to be especially targeting consumers who need products now but would prefer not to go to a retail store for convenience or virus protection reasons - if a lightning fast delivery option was available.

The Bloomberg report says that Amazon actually views empty store space in malls as a weak option. Department stores such as J.C. Penney are often two stories and lack sufficient loading capacity, meaning they require extensive remodeling to accommodate an Amazon delivery hub.

In addition, mall leases with existing tenants often prohibit the owner from introducing a delivery hub that could impact the consumer shopping experience.

What do you think of this latest Amazon news? Let us know your thoughts at the Feedback section below.




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