Amazon Ramps Up $13.9 Billion Warehouse Building Spree(bloomberg.com)
bloomberg.com
Amazon Ramps Up $13.9 Billion Warehouse Building Spree
http://www.bloomberg.com/news/2013-08-20/amazon-ramps-up-13-9-billion-warehouse-building-spree.html
10 comments
Also releveant
1.A network of automated lockers is being built around the world: amazon, google, few british companies , german mail, and a polish company offering global lockers, which recently got $200 million investment. Highly useful for amazon.
2.Amazon is "secretly" building robots, and ordered a place at an important logistics trade show in 2015. They might launch a global 3rd party logistics , based on robotics then.
3.Amazon offers a financing services for some sellers. By having access to their business internals, it can offer low rate loans efficiently. Could be a killer feature for sellers.
1.A network of automated lockers is being built around the world: amazon, google, few british companies , german mail, and a polish company offering global lockers, which recently got $200 million investment. Highly useful for amazon.
2.Amazon is "secretly" building robots, and ordered a place at an important logistics trade show in 2015. They might launch a global 3rd party logistics , based on robotics then.
3.Amazon offers a financing services for some sellers. By having access to their business internals, it can offer low rate loans efficiently. Could be a killer feature for sellers.
1)Yep, they have a key partnership with 7/11 among others.
2) They bought Kiva robotics a while back
3) I've seen those lending offers for some time now, they are pushing them to sellers based on business internals as you've mentioned.
2) They bought Kiva robotics a while back
3) I've seen those lending offers for some time now, they are pushing them to sellers based on business internals as you've mentioned.
Looking forward to the robot postmen
As I followed Amazon's buildout over the years, I couldn't help but wonder why FedEx is either overlooked in (or overlooking) this market.
I worked in one of these facilites many years ago, asked, and got mostly shrugs.
Their 'Global Distribution Centers' offer 24/7, 365 fulfillment, and exclusive 'last minute' access to shipping hubs.
I worked in one of these facilites many years ago, asked, and got mostly shrugs.
Their 'Global Distribution Centers' offer 24/7, 365 fulfillment, and exclusive 'last minute' access to shipping hubs.
I expect that it has to do with the fact that building a shipping infrastructure takes a lot of time to ramp up. Amazon has a sweetheart deal with FedEx and if FedEx thinks that Amazon is going to try to replace them, FedEx can make it very expensive for Amazon during the transition.
This is why Amazon Grocery is so important - it lets Amazon build out a shipping infrastructure in a way that seems uncompetitive to UPS/FedEx
This is why Amazon Grocery is so important - it lets Amazon build out a shipping infrastructure in a way that seems uncompetitive to UPS/FedEx
FedEx does not have the technical culture to compete with Amazon. Flat out. Most people in Memphis know someone who works there or worked there and it's a hot mess on the inside. They succeed, and have for many years, but I tend to think of them as one of the whales that gelled technical "Ahab" teams that understand the value of the hacker culture will take down one by one over the next 20-40 years.
Technical debt, poisonous power structures, aging entrenched workforces, layoffs, and shifting economic conditions will force places like FedEx to innovate and I've got my money on them not being able to compete in the next economy. It's a case study I've thought a lot about and I really can't wait to find out if I'm wrong.
Technical debt, poisonous power structures, aging entrenched workforces, layoffs, and shifting economic conditions will force places like FedEx to innovate and I've got my money on them not being able to compete in the next economy. It's a case study I've thought a lot about and I really can't wait to find out if I'm wrong.
I was also curious about this, I assumed the competition between UPS and Fedex was fierce enough to keep them both fairly innovative, but it sounds like Amazon is finding room for improvement...
FedEx is about business documents mostly, as far as I know.
Not to mention, they're a middle man. Amazon gains a lot by cutting out the middle man.
Not to mention, they're a middle man. Amazon gains a lot by cutting out the middle man.
FedEd is not the kind of establishment that likes to shake things up.
I'm not so sure about the online grocery thing. Won't people want to touch their food before buying it?
I say that somewhat ironically, because of course that's exactly what everyone said about online shopping from the beginning. So it's a safe bet, I think, that online grocery will grow and ultimately own a substantial chunk of the market.
I would love to read more about start-ups in this space. Every interface for ordering groceries, including Amazon's, is just frustratingly bad. It's even harder to get ordering right for groceries than it is for take-out!
"Build a better way to buy groceries online" sounds like a great idea. As long as you're cool with Walmart Labs acquiring you in a couple weeks/months/years.
I say that somewhat ironically, because of course that's exactly what everyone said about online shopping from the beginning. So it's a safe bet, I think, that online grocery will grow and ultimately own a substantial chunk of the market.
I would love to read more about start-ups in this space. Every interface for ordering groceries, including Amazon's, is just frustratingly bad. It's even harder to get ordering right for groceries than it is for take-out!
"Build a better way to buy groceries online" sounds like a great idea. As long as you're cool with Walmart Labs acquiring you in a couple weeks/months/years.
It's an interesting point.
We've actually stopped buying fresh produce from online groceries because the quality / freshness has been consistently poor or in some cases (meat) even declined.
We've only had the opportunity to try Coles Online (Australia) because they're the only provider that delivers to my suburb. I'm sure others have better experiences, but it's interesting that the initial concerns played out.
We use online groceries for dry foods, nappies etc.
We've actually stopped buying fresh produce from online groceries because the quality / freshness has been consistently poor or in some cases (meat) even declined.
We've only had the opportunity to try Coles Online (Australia) because they're the only provider that delivers to my suburb. I'm sure others have better experiences, but it's interesting that the initial concerns played out.
We use online groceries for dry foods, nappies etc.
Webvan in Dotcom 1.0 consistently did better quality produce than Safeway. I didn't understand Whole Foods/etc. back then, but I'm pretty sure the quality was essentially what I get at Berkeley Bowl or Whole Foods today.
I don't think "good quality produce without touching it" is impossible to solve.
I don't think "good quality produce without touching it" is impossible to solve.
How does Amazon perfecting daily grocery delivery relate to shipping furniture costs plummeting?
If they're already sending large trucks from their warehouses to every block in an area everyday, it's relatively cheap to include other large delivery items when ordered.
The delivery infrastructure they build for grocery delivery can be used to deliver other things later.
Fresh already delivers a lot more than just groceries. Plenty of common durable goods like dvds and video games, for example.
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How does #3 work? The merchants store their inventory in Amazon warehouses? Or do they use Amazon software to track their inventory?
Re: #2, so Amazon is playing the role of FedEx/UPS?
Re: #2, so Amazon is playing the role of FedEx/UPS?
Yes, Fulfilled by Amazon is all about storing 3rd party inventory in the Amazon warehouses. At my current company, all of our e-commerce enabled goods are in Amazon warehouses (about 20,000 units all told at the moment).
Amazon still uses USPS/UPS/Fedex to ship goods, and they pass their discounts to merchants who use FBA.
Amazon still uses USPS/UPS/Fedex to ship goods, and they pass their discounts to merchants who use FBA.
They have a service called "Fulfillment by Amazon" (FBA). You don't even have to be a huge merchant to use it, I have tried using it just to learn how it works to ship one item which was worth about $10. It's totally automated, no need to talk to a person.
On their website you can add new items that appear on Amazon if they don't already have a listing for it.
When you want to send the items to their warehouse, there are two pieces of info they need. One is a way to identify the shipment when they receive it, another is to be able to identify each individual item in the shipment.
For the shipment part, you list the items you are going to send them using their web interface and then get a document to print for sending along with the shipment, which has a barcode they scan to know what the shipment is when it arrives.
For the items, if they don't already have suitable barcodes that help them know which listing each item is related to, you can create barcode stickers and attach them to the items, also through that web interface.
After they get the shipment, they appear in your inventory on the site. If people buy the items through Amazon, they will ship it for you. They also have an API for dispatching an item to an address you desire. There are some options for removing Amazon box branding too, if you want to just use them to handle shipping for you.
On their website you can add new items that appear on Amazon if they don't already have a listing for it.
When you want to send the items to their warehouse, there are two pieces of info they need. One is a way to identify the shipment when they receive it, another is to be able to identify each individual item in the shipment.
For the shipment part, you list the items you are going to send them using their web interface and then get a document to print for sending along with the shipment, which has a barcode they scan to know what the shipment is when it arrives.
For the items, if they don't already have suitable barcodes that help them know which listing each item is related to, you can create barcode stickers and attach them to the items, also through that web interface.
After they get the shipment, they appear in your inventory on the site. If people buy the items through Amazon, they will ship it for you. They also have an API for dispatching an item to an address you desire. There are some options for removing Amazon box branding too, if you want to just use them to handle shipping for you.
> The warehouse strategy carries risk. Fulfillment has become Amazon’s top operating expense, squeezing profit margins and contributing to a $39 million loss at the Seattle-based company last year.
Not building warehouses carries more risk.
Not building warehouses carries more risk.
39M USD loss is a token loss, too. Cost of building, staffing and operating a warehouse is going to be far in excess of that.
From the Instacart CEO: "We don’t have to build warehouses, lease a fleet of trucks or manage perishable inventory, which substantially reduces our operational cost."
If they guarantee delivery in 2 hours and they don't have these costs, they're paying someone else who has these costs, right? How can they really be a competitor to Amazon, then? I have to think that Amazon is operating on such razor-thin margins precisely because they think they can do a much better job than using someone else.
If they guarantee delivery in 2 hours and they don't have these costs, they're paying someone else who has these costs, right? How can they really be a competitor to Amazon, then? I have to think that Amazon is operating on such razor-thin margins precisely because they think they can do a much better job than using someone else.
The difference is that Instacart, with a few orders of magnitude less resources, can deliver your groceries within two hours today and Amazon can't.
Obviously, as your volume increases, it makes sense to own more steps along the value chain yourself.
Obviously, as your volume increases, it makes sense to own more steps along the value chain yourself.
Yeah, except that Instacart's delivery area is a LOT (orders of magnitude) smaller than Amazon's.
I imagine that they are really the Uber in this area... They provide a good flexible service ontop of existing infrastructure at a premium cost to users.
While that's just fine - I would love to see a service that lowers the cost to me as a consumer for food.
Actually, let me rephrase that: I, personally, need a service that helps me reduce the amount of food I waste. With a family of (5) in my household, we waste a lot of food - and it drives me nuts.
I hope that something along the lines of Blue Apron could help me throw out less/buy less.
While that's just fine - I would love to see a service that lowers the cost to me as a consumer for food.
Actually, let me rephrase that: I, personally, need a service that helps me reduce the amount of food I waste. With a family of (5) in my household, we waste a lot of food - and it drives me nuts.
I hope that something along the lines of Blue Apron could help me throw out less/buy less.
I think I have the same problem, but in the opposite way. I live by myself and end up wasting too much food because I don't eat all that I buy, but find it difficult to buy less. For example, I threw out half a lime this morning. I bought it a few days ago only needing a few slices, then didn't use the rest.
In the case of a single lime it isn't really possible to buy less (and at least limes are cheap), but with other items I could benefit from more exact planning.
In the case of a single lime it isn't really possible to buy less (and at least limes are cheap), but with other items I could benefit from more exact planning.
Not sure I understand. You want to eat less or have more food deliveries so it's always fresh ?
I want to more closely buy the amount of ingredients required in what I would use them for.
I would love to be able to shop based on meals - where I say "on Wednesday night we are going to serve turkey meatloaf with broccoli and salad for 4 people" and understand the ingredients and proportions that match that.
I wind up having stuff rot because I only use a portion of it for whatever I make, and I don't have a set menu so the food is random/too-often-the-same etc...
I want the entire experience to be optimized.
I would love to be able to shop based on meals - where I say "on Wednesday night we are going to serve turkey meatloaf with broccoli and salad for 4 people" and understand the ingredients and proportions that match that.
I wind up having stuff rot because I only use a portion of it for whatever I make, and I don't have a set menu so the food is random/too-often-the-same etc...
I want the entire experience to be optimized.
Soup and probably other meals are traditionally used to recycle unused ingredients and avoid that "always the same" feeling. It might be easier to do that.
Agreed. and I am actually quite good at slowcooking stuff in my CrockPot.
Maybe I have just been too lazy? However, I am not 100% convinced that food is not sold in the wrong proportions.
Maybe I have just been too lazy? However, I am not 100% convinced that food is not sold in the wrong proportions.
It is better to optimize your menu which is in your hands than wanting your shopping experience to be optimized.
They pay their delivery people. They're a competitor to Amazon in that they've traded the operational cost of warehouses for the risks associated with crowdsourcing (quality control, etc.). Amazon probably perceives the risk of crowdsourcing as too high, or at the very least it's outside of their operational "comfort zone".
But they're entirely different (to me). They essentially exist on top of other companies' operational costs of warehousing, trucks, etc, so those costs PLUS a profit (presumably) are built into Costco / Trader Joe's / whoever else they source from. They're a glorified courier system, it seems. If that's true, they're less a competitor to Amazon and more a competitor to FedEx / UPS / USPS.
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We don't operate out of big warehouses, so we don't have these costs. It's a totally different model.
Interesting that they complain about Amazon's operating margins. Isn't the consensus that it is intentional?
Yes, the article is written as if Amazon is compelled to take this action, and as a result their margins will suffer. But it's more like Amazon chooses to take this action, and doesn't care if it impacts their margin.
That's just what financial reporters do. Whether the margins are intentional or not, they're still information that bloomberg readers want to know about.
Bloomberg readers should want to know why, rather than assuming that Amazon is actually trying to increase it's profits, like most companies. It could have been discussed in this article.
I do wonder what is going on with Amazon shipping. For my orders over the last year, by far the longest time is spent not shipping. The status will say "shipping now" for several days. Once actually in package service it is quick. I use the "free" shipping.
I'd guess that they process Prime members shipping before the free shipping. And I'd suspect some of the waiting is time to ship from the manufacturers to Amazon's warehouses. I also wonder if they transfer long tail items between warehouses to consolidate orders. There is speculation that Amazon intentionally delays free shipping orders to push people towards Prime. Maybe they just have capacity problems?
By comparison with other vendors like Walmart I usually see shipping in less than 24 hours.
Amazon forum complaining about slow shipping, people getting Prime stuff a lot faster, no response from Amazon people:
http://www.amazon.com/Super-Slow-Shipping/forum/Fx4HQD057HT5...
Giving credit to Prime members to accept slower shipping:
http://www.geek.com/news/amazon-prime-customers-receiving-cr...
Another random example complaint:
http://www.pissedconsumer.com/reviews-by-company/amazon/very...
I'd guess that they process Prime members shipping before the free shipping. And I'd suspect some of the waiting is time to ship from the manufacturers to Amazon's warehouses. I also wonder if they transfer long tail items between warehouses to consolidate orders. There is speculation that Amazon intentionally delays free shipping orders to push people towards Prime. Maybe they just have capacity problems?
By comparison with other vendors like Walmart I usually see shipping in less than 24 hours.
Amazon forum complaining about slow shipping, people getting Prime stuff a lot faster, no response from Amazon people:
http://www.amazon.com/Super-Slow-Shipping/forum/Fx4HQD057HT5...
Giving credit to Prime members to accept slower shipping:
http://www.geek.com/news/amazon-prime-customers-receiving-cr...
Another random example complaint:
http://www.pissedconsumer.com/reviews-by-company/amazon/very...
Agreed. Amazon's shipping service is very poor unless you use Prime.
I've bought from Amazon when I had a Prime subscription and when I didn't. With Prime, the goods were always shipped within a day. Without Prime, they let it sit on the shelf for 5 or 6 days before even shipping it.
Compare that to other companies like Best Buy, newegg, walmart, or even no name ebay sellers where products are always promptly shipped without need for any "subscription" nonsense.
I've bought from Amazon when I had a Prime subscription and when I didn't. With Prime, the goods were always shipped within a day. Without Prime, they let it sit on the shelf for 5 or 6 days before even shipping it.
Compare that to other companies like Best Buy, newegg, walmart, or even no name ebay sellers where products are always promptly shipped without need for any "subscription" nonsense.
Would you rather it ship today and arrive a week from now? Or ship in 3 days and arrive in 4? When you make your purchase, you are given a promised arrival date...the ship date should be irrelevant.
False choice.
With Amazon, it sits on the shelf for 5 days before it ships and then takes another 5 days to arrive.
With something like walmart, it ships immediately and then takes another 5 days to arrive.
Amazon's in-transit time isn't any faster than other merchants. They all use UPS or Fedex, so no difference there. The only difference is that Amazon takes 5 days to ship while other websites take 1.
With Amazon, it sits on the shelf for 5 days before it ships and then takes another 5 days to arrive.
With something like walmart, it ships immediately and then takes another 5 days to arrive.
Amazon's in-transit time isn't any faster than other merchants. They all use UPS or Fedex, so no difference there. The only difference is that Amazon takes 5 days to ship while other websites take 1.
Except that it is not a false choice at all. Amazon delivers by their promised delivery date. I have ordered items with my prime membership that took two days for it to ship, and yet it still arrived on time (arrived the same day it shipped, via a same day carrier). A super saver shipping promise is 5-7 business days. If it takes 5 business days to ship, then your package is getting a second-day ship method. From the several hundreds of packages I have received from Amazon, both before and after my prime membership, only 1 has ever arrived after it was promised to arrive...and it was the carrier's fault.
> Amazon delivers by their promised delivery date.
Except that there are alternatives to Amazon, hence my use of the word "choice". I'm not saying Amazon doesn't keep its promise. I'm saying when Amazon is compared to its competitors it falls short.
> A super saver shipping promise is 5-7 business days
Actually it's 5-8 business days (http://www.amazon.com/gp/help/customer/display.html?ie=UTF8&...) and usually Amazon milks it to its limit. 8 business days equal 10 to 12 real days.
Compare that to merchants that ship immediately. It usually takes 3-5 days to arrive at my home. That's a lot faster than Amazon's 10-12 days.
Except that there are alternatives to Amazon, hence my use of the word "choice". I'm not saying Amazon doesn't keep its promise. I'm saying when Amazon is compared to its competitors it falls short.
> A super saver shipping promise is 5-7 business days
Actually it's 5-8 business days (http://www.amazon.com/gp/help/customer/display.html?ie=UTF8&...) and usually Amazon milks it to its limit. 8 business days equal 10 to 12 real days.
Compare that to merchants that ship immediately. It usually takes 3-5 days to arrive at my home. That's a lot faster than Amazon's 10-12 days.
Wow. I've had cheap items with free shipping from Hong Kong to the UK take less time than that to turn up. That really is amazingly slow shipping.
I've had two orders in the last few months where one of the items was snail mailed from Hong Kong. In both cases it beat the Amazon warehouse shipping by a few days. (West Coast of US.)
Do competitors usually give that shipping for free though? I thought the point of super saver shipping was you don't have to pay for the shipping but the tradeoff is you have to wait however long it takes to get your package. If the competitors are somewhat faster but you still have to pay then the scenarios can't really be compared (I am a prime member so I have paid less than $1 per delivery for guaranteed two day shipping so I have never even considered alternatives).
Pretty much everyone offers some "free" shipping these days, which is just a marketing scheme anyway. Free shippoing or not, the only number that matters is the total, all-inclusive price. It's not uncommon for me to find a lower total price at a seller that charges for shipping than the Amazon's "free" shipping price.
WSJ actually just published an article on how Amazon is frequently underpriced by other sellers: http://online.wsj.com/article/SB2000142412788732342380457902...
There's no one seller that is consistently the lowest price. But Amazon is consistently the slowest in shipping.
WSJ actually just published an article on how Amazon is frequently underpriced by other sellers: http://online.wsj.com/article/SB2000142412788732342380457902...
There's no one seller that is consistently the lowest price. But Amazon is consistently the slowest in shipping.
> Do competitors usually give that shipping for free though?
It isn't free - the cost of the shipping is baked in the product prices. Walmart's threshold is $45 for no additional charge, shipping to one of their stores is no additional charge, and below the threshold shipping is usually 97c.
In any event this isn't about "can you pay more for faster shipping" which is the case virtually everywhere, but that it seems like Amazon is holding back on their lowest tier before the actual shipping which none of their competitors seem to do.
There is an obvious benefit to them in Prime upsells. Actual logistical reasons seem at odds with the story about huge spending on warehouses.
It isn't free - the cost of the shipping is baked in the product prices. Walmart's threshold is $45 for no additional charge, shipping to one of their stores is no additional charge, and below the threshold shipping is usually 97c.
In any event this isn't about "can you pay more for faster shipping" which is the case virtually everywhere, but that it seems like Amazon is holding back on their lowest tier before the actual shipping which none of their competitors seem to do.
There is an obvious benefit to them in Prime upsells. Actual logistical reasons seem at odds with the story about huge spending on warehouses.
It's irritating because it feels like they're deliberately shipping it slower to get you to buy the expensive shipping. With newegg if you choose "up to 7 days" you get it in 3-7 depending on when it arrives for them. With amazon it seems like if they get it early they'll deliberately hold it so that it always takes 7 days.
I really doubt that they're deliberately doing that just to push you to upgrade, though. Basically, you're paying less in exchange for allowing their workers to focus on the higher priority packages that are paying more. Supersaver is probably like remnant advertising inventory - they probably get to those when things are slow to fill in the gaps. Put another way, the Prime and normal shipping speed people are subsidizing your savings.
Newegg offers a different, more proactive approach that might sit better - you can pay $2.99 for rush processing to get them to get stuff out to you quickly, otherwise it might take a day to ship.
Newegg offers a different, more proactive approach that might sit better - you can pay $2.99 for rush processing to get them to get stuff out to you quickly, otherwise it might take a day to ship.
We don't know what Amazon's order flow is, but if it is reasonably uniform then it doesn't make sense. Stalling super saver orders for several days doesn't save you any work or priorities. It still has to be shipped and new orders still come in.
If the higher priority orders are very lumpy then it does make far more sense to process them first and have variability in the response time for the super saver orders.
Without some sort of crowdsourcing effort we can't tell what everyone's actual experience is. The anecdotal data so far is delays in Amazon's lowest tier happen that don't exist at their competitors. The story is about them spending more on warehouses, so something doesn't add up.
If the higher priority orders are very lumpy then it does make far more sense to process them first and have variability in the response time for the super saver orders.
Without some sort of crowdsourcing effort we can't tell what everyone's actual experience is. The anecdotal data so far is delays in Amazon's lowest tier happen that don't exist at their competitors. The story is about them spending more on warehouses, so something doesn't add up.
Yeah, I considered that, but order volume is almost certainly not uniform over the course of the week. Any web company could tell you that load varies quite a bit over the course of the week, and I'm sure shopping is the same.
From everything I've heard, they're an aggressively frugal company, so I would guess that they don't have the packing capacity to handle their peak days of the week, but they do have enough to handle the total week's load. Their competitors are probably overprovisioned to improve their consistency, but that leads to higher prices.
From everything I've heard, they're an aggressively frugal company, so I would guess that they don't have the packing capacity to handle their peak days of the week, but they do have enough to handle the total week's load. Their competitors are probably overprovisioned to improve their consistency, but that leads to higher prices.
Does that match your ordering experience? Because for me Amazon have been more consistent - super saver items are consistently delivered at the end of the delivery window. Other retailers seem to have a wider distribution like you describe.
Hm, that is interesting. It's been a couple of years since I last used Super Saver shipping, so they might have changed, but I remember it being pretty variable, between slow and super slow.
It's probably sitting in a big truck somewhere that only leaves once it's full, to minimize cost. If shipping speed is important to you, perhaps you should pony up.
You've missed the point. The experience with other retailers seems to be quick dispatch of items to the shipping service.
The article is claiming massive warehouse investments by Amazon, yet that is somewhat at odds with shipping non-Prime items slowly. It would seem somewhat strange to deliberately ship slowly to push Prime upsells since that hands things to competitors, and is only doable if you are close to a monopoly.
It is possible that trailers (not trucks) are sitting around until full but that takes up space. They also generate the tracking id before it goes into a trailer, and you usually see less than 24 hours before it arrives somewhere outside the warehouse. I doubt there is any benefit to letting trailers fill up over several days. The shippers also use regional distribution centers so there isn't a need to have a full trailer, although full pallets would make sense. However Amazon should be able to fill those in a few hours.
Here is an article from 2008 about a Newegg distribution centre. Note that several trailers a day were filled.
http://www.anandtech.com/show/2531/7
And another from last year explaining how the warehouse is almost empty moving stuff as quickly as possible.
http://www.stores.org/STORES%20Magazine%20May%202012/newegg-...
The article is claiming massive warehouse investments by Amazon, yet that is somewhat at odds with shipping non-Prime items slowly. It would seem somewhat strange to deliberately ship slowly to push Prime upsells since that hands things to competitors, and is only doable if you are close to a monopoly.
It is possible that trailers (not trucks) are sitting around until full but that takes up space. They also generate the tracking id before it goes into a trailer, and you usually see less than 24 hours before it arrives somewhere outside the warehouse. I doubt there is any benefit to letting trailers fill up over several days. The shippers also use regional distribution centers so there isn't a need to have a full trailer, although full pallets would make sense. However Amazon should be able to fill those in a few hours.
Here is an article from 2008 about a Newegg distribution centre. Note that several trailers a day were filled.
http://www.anandtech.com/show/2531/7
And another from last year explaining how the warehouse is almost empty moving stuff as quickly as possible.
http://www.stores.org/STORES%20Magazine%20May%202012/newegg-...
It is an interesting vote against local manufacturing. There is a small number of people who are betting that the 'future' won't be warehouses so much as they will be small 'build on demand' factories which create the item you ordered, when you order it. When you consider the 27.5yr depreciation life of this sort of physical plant you might guess that Amazon is betting against some sort of 'kindle' equivalent for goods (i.e. Shipping the information rather than the good itself)
I own a small factory - 15,000 sq ft, and ten employees. We are currently doing mostly 'build on demand' which is another way to say 'Just-in-time'(0). About 50% of the daily shipments are products built _that day_. We are offering custom colors, personalized engraving, and will even change some of the dimensions for a single piece order. The parts that we sell that are not build on demand have usually been created within two weeks. There is nothing dusty in the warehouse, it just doesn't stay around.
This is all possible because of flexible tooling and processes. We get our raw material from all over the country, and a small portion of the parts are sourced internationally. I would bet/hope the future looks somewhat like the path we are on. Many consumers seem to want similar things as everyone else, just a little different and custom.
As for depreciation, on a small scale the Section 179 provision works quite well for us. The IRS will let you deduct $500,000 per year in the same year the equipment was put into service(1). As long as I don't spend more than $500,000 that year on equipment, then no depreciation schedule needed, just take it all that year. An operation the size of mine can't spend that much anyway!
I own a few 3D printers, and after using them I am not worried about my future. I think the most likely outcome of better machines in the 'push button, make stuff' area will just be more and more complex items that are built on shorter runs. Infrastructure is good enough to get products shipped around easily. So I think in the future will be small operations like mine making semi-custom stuff more complex than you can make yourself. It will be like printing, the desktop printer brought the ability to make nice printouts home but it didn't kill high speed offset printing. Now we get high speed offset printing with each copy able to have each print with a different picture and wording. As domestic tools get better, so do industrial tools. Someone using a tool everyday can afford much better tools than a hobbyist.
Also consider time - A 3D printer might take 8 hours to print that Yoda figurine, and Amazon is trying to get you the molded one in a couple of hours. As long as you live in an urban area, you would still be faster with Amazon.
0. http://en.wikipedia.org/wiki/Just_in_time_(business) 1. http://en.wikipedia.org/wiki/Section_179_depreciation_deduct...
This is all possible because of flexible tooling and processes. We get our raw material from all over the country, and a small portion of the parts are sourced internationally. I would bet/hope the future looks somewhat like the path we are on. Many consumers seem to want similar things as everyone else, just a little different and custom.
As for depreciation, on a small scale the Section 179 provision works quite well for us. The IRS will let you deduct $500,000 per year in the same year the equipment was put into service(1). As long as I don't spend more than $500,000 that year on equipment, then no depreciation schedule needed, just take it all that year. An operation the size of mine can't spend that much anyway!
I own a few 3D printers, and after using them I am not worried about my future. I think the most likely outcome of better machines in the 'push button, make stuff' area will just be more and more complex items that are built on shorter runs. Infrastructure is good enough to get products shipped around easily. So I think in the future will be small operations like mine making semi-custom stuff more complex than you can make yourself. It will be like printing, the desktop printer brought the ability to make nice printouts home but it didn't kill high speed offset printing. Now we get high speed offset printing with each copy able to have each print with a different picture and wording. As domestic tools get better, so do industrial tools. Someone using a tool everyday can afford much better tools than a hobbyist.
Also consider time - A 3D printer might take 8 hours to print that Yoda figurine, and Amazon is trying to get you the molded one in a couple of hours. As long as you live in an urban area, you would still be faster with Amazon.
0. http://en.wikipedia.org/wiki/Just_in_time_(business) 1. http://en.wikipedia.org/wiki/Section_179_depreciation_deduct...
I don't think you can really draw that conclusion. Even if local build-on-demand factories end up entirely replacing shipped goods, 27.5yrs is probably pretty close to a minimum timeline for that happening. Any huge systemic shift in the nature of physical goods like that will take a very long time.
Amazon is perfectly happy to print books on demand for low-circulation paperback books [1].
The kind of build-on-demand system that could print an iPhone then a DVD then a pushchair then a fitted shirt then a delicious tomato then a bottle of olive oil is a long way off. I'd happily bet $10 that such technology won't be commonplace by 2040.
[1] http://www.amazon.co.uk/POD
The kind of build-on-demand system that could print an iPhone then a DVD then a pushchair then a fitted shirt then a delicious tomato then a bottle of olive oil is a long way off. I'd happily bet $10 that such technology won't be commonplace by 2040.
[1] http://www.amazon.co.uk/POD
What if in 10-20 years, Amazon buys a Universal Factory in a (Large) Box startup, and sets them up at each warehouse? I think it's feasible.
While I'm in favor of CNC'ing things on demand, it's doesn't scale very well. Machine time adds up - multiple tooling, batch processes like cleaning/finishing/painting,etc.
'The Market' seems to agree, as warehouse buildout (and purchasing) is booming right now - as it seems more economical to produce things in large runs and then hoard them in port cities like LA,New Orleans, Memphis, etc...
'The Market' seems to agree, as warehouse buildout (and purchasing) is booming right now - as it seems more economical to produce things in large runs and then hoard them in port cities like LA,New Orleans, Memphis, etc...
Nobody's attempted to build a fully automated, general purpose(ish) factory yet. I'm sure there'll be plenty of complexities and limitations, but there are limits and complexities with existing systems that we've just accepted as "the way things are".
I'm fairly confident that general purpose automated manufacturing will become a reality and will be transformative, but I doubt it will completely take over the market. I'm pretty sure there'll be room for both.
I'm fairly confident that general purpose automated manufacturing will become a reality and will be transformative, but I doubt it will completely take over the market. I'm pretty sure there'll be room for both.
The jewelry business I worked for had a mix of this. All the jewelry started out as a casting, to which a gemstone was added, most of the time after the product was ordered (made to order). However, we also used FBA extensively for the most common builds.
When you really need something, there is a premium for shipping within hours. Whether it's diapers or a six pack of beer, speed matters. This is a huge pivot from Amazon, which was previously won on price and size of catalogue.
Note - If Amazon gets licensed for beer and can deliver it in hours, game over for a lot of players!
Note - If Amazon gets licensed for beer and can deliver it in hours, game over for a lot of players!
Also for diapers... I know you were being facetious, but speaking as a parent, a company that can deliver diapers and formula within a few hours is going to get a lot of immediate attention and devotion!
Amazon provides the subscribe and save service to fill this need. You can set up the frequency of delivery and the quantity of units and never have to worry. They give you a nice discount on the order if you do it this way as well
Clearly you are only passingly familiar with young children. ;) As @mathattack implies, one cannot predict an infant's near-future need for diapers with the same confidence with which one can predict e.g. when a furnace filter needs changing.
The issue isn't about planning. It's, "Holy Sh*t, the baby just pooped 3 times in an hour, and I have 1 diaper to hold me until tomorrow" When that last diaper goes, instant service is at a premium.
Amazon owns Diapers.com, btw.
I wonder if they bought it with instant delivery in mind. I assume someone in HN should have insight into how integrated their back ends are.
If they didn't spend the money on growth it would count as profit and they'd have to pay taxes on it.
One more proof that Amazon is a retail company and not a technology company (only technology is allowed is for the retail sake).
Yeah, slow and steady growth...
Amazon's never been about "slow and steady" growth. They've been about long-term growth at the expense of short-term profit.
Or, more to the point, using their dominance and abundance against their competitors. They may have razor thin margins, but that's only because they're leveraging their pricing to cut into the margins of their competitors.
Lower prices here and there, raise them elsewhere to offset the cost. Their accounting department definitely has to be kept on their toes, especially to make sure things don't fly off the handle too much.
Lower prices here and there, raise them elsewhere to offset the cost. Their accounting department definitely has to be kept on their toes, especially to make sure things don't fly off the handle too much.
Amazon: Fast, Cheap, and Good: Pick all three.
They've really delivered. I've tried to not like Amazon, but they keep impressing with their fast service, availability, low price.
They've really delivered. I've tried to not like Amazon, but they keep impressing with their fast service, availability, low price.
Exactly. When Rise of the Warrior Cop came out, I wanted to pick it up on release day. None of the local bookstores had it in stock, but all were happy to order it for me. It would have taken them all 4-5 business days.
I went to Amazon that night, and with Prime, I got it in 2 days, for about $10 less than the local brick and mortar stores.
How can anyone compete with that? Especially if they build out their same-day service?
I went to Amazon that night, and with Prime, I got it in 2 days, for about $10 less than the local brick and mortar stores.
How can anyone compete with that? Especially if they build out their same-day service?
Yeah, I think same day will strike a complete death blow for retail if they can pull it off well.
Yeah, it's becoming really hard to use other places, even my use of Newegg has started to be pared back due to how great Amazon is.
For instance, I ordered a new monitor a couple of weeks ago. On the day it was delivered I noticed that Amazon had the monitor for $20 cheaper. So, I opened a chat window with a service rep basically saying "Hey, can I get that $20 back?" and a few minutes later I get "Sure, you should see the credit show up in a couple of days."
I mean, it's that type of interaction that makes it really hard to use other retailers.
For instance, I ordered a new monitor a couple of weeks ago. On the day it was delivered I noticed that Amazon had the monitor for $20 cheaper. So, I opened a chat window with a service rep basically saying "Hey, can I get that $20 back?" and a few minutes later I get "Sure, you should see the credit show up in a couple of days."
I mean, it's that type of interaction that makes it really hard to use other retailers.
Officially, they don't price match themselves anymore, but as you've experienced, they will do it if you haven't received the item yet and they decide to in your case. After all, you could always refuse delivery and re-order. However, there are plenty of reports of them saying, "Sorry, tough".
Some trends I think will come soon from Amazon FBA:
1) When Amazon perfects daily grocery delivery it will change the whole ballgame for UPS and USPS. Amazon will cut them out of the picture. I think the cost of shipping furniture especially will plummet.
2) Amazon launched FBA Export a while back to let merchants fulfilling through FBA U.S. ship anywhere in the world easily. Right now only a few SKUs are eligible, but they are working to expand this program ASAP. In a year or two, a ton of products on Amazon U.S. will be available anywhere.
3) A lot of mainstream people don't know but Amazon warehouses don't just ship to Amazon customers. Merchants can enable multichannel shipping for a price ($6 compared to $2.50 for Amazon orders), so a lot of eBay sellers, Rakuten sellers use FBA to fulfill.