Amazon fulfillment network far ahead of other retailers

OCTOBER 20, 2015 | BY DAN BERTHIAUME

Keeping track of Amazon's  constantly expanding network of facilities is tough, but one count puts the retailer at having 173 supply chain centers across the globe.

According to a new report from ChannelAdvisor, the online giant has  104 North American facilities and 69 facilities outside North America. The total number includes fulfillment centers (FCs,), sortation centers (SCs), redistribution fulfillment centers (RFCs) and "Prime Now" hubs (PNs).

"Amazon is very far ahead of any other retailer in the build out of e-commerce oriented logistical infrastructure," states ChannelAdvisor.  "Amazon now has the ability to put millions of products miles away from a large portion of the US population.  In a world where selection/assortment, fast/inexpensive shipping matter to the consumer, Amazon has built a huge competitive moat that is 10X larger than the nearest competitor."

As Amazon pushes down delivery times and costs, with programs like Amazon Prime Fresh, same day delivery, and next hour delivery via Prime Now, Channel Advisor predicts that other retailers are going to struggle to come close.

The region with the largest investment by Amazon  is the Northeast, with a new 200,000-sq.-ft. FC and SC in New Jersey, a new SC in Connecticut, a million-square-foot FC in the Boston area and a 7,000-sq.-ft. SC in Pennsylvania.

The Midwest is also receiving a lot of investment with five new facilities.  The Chicago area received two FCs and a SC and the Twin Cities are getting two large FCs, with one measuring 820,000-sq.-ft.

The West Coast, Southeast, Southwest and Mexico have all received relatively smaller investments this past year. California has two new FCs open, while San Marcos, Texas had a new 885,000-sq.-ft. FC announced in Augustc2015 and Mexico had its first FC announced in November 2014.

Outside North America, Eastern Europe had three previously announced FCs open in Poland. The U.K. has a 250,000-sq.-ft. FC expected to open later this fall, as well as an Amazon Fresh facility announced for London in August 2015. China had an 86,000-sq.-ft FC open in in November 2014 in Huangpu Development Zone.
In the past 12 months, Amazon has opened 15 domestic and six international facilities, totaling 21 new facilities, or 14% growth, as well as more than 115 million-sq-ft worldwide under management.  This represents a slow-down from a percentage standpoint.

According to Channel Advisor analysis, in addition to building new facilities, Amazon is investing in automation, fulfillment by Amazon (FBA) fee structure, retooling/renovations and other areas to get more performance out of the existing infrastructure. 

In addition, as Amazon builds out the logistical network, Channel Advisor observes that Amazon is cutting out third-party carriers like UPS and FedEx in areas with a lot of Amazon Prime members.