Amazon Again Ramps Up its Distribution Footprint

The e-commerce giant had eased off on new projects in the wake of the pandemic.

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Amazon’s lull in new projects following the explosive growth of the pandemic era appears to be over, according to a new report.

The e-commerce giant, the Wall Street Journal reports, is planning to add a slew of new warehouse and distribution facilities in a bid to compete with online and brick-and-mortar rivals alike. The Journal, citing data from supply chain consulting firm MWPVL, indicated that the new projects would add some 16 million square feet to Amazon's late-2023 North American footprint of more than 400 million square feet.

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During the COVID-19 pandemic, Amazon (AMZN) roughly doubled the size of its logistics operations in a bid to keep up with soaring demand from consumers who were staying at home and ordering products online. After pandemic-related restrictions eased, the company slowed its expansion for about two years.

Recently, however, new developments in the e-commerce market prompted Amazon to change course. One is Walmart’s growing e-commerce ambitions based on its immense footprint of physical stores; the second is the rise of budget online shopping options, particularly from two companies with roots in China: Shein and Temu.

The new Amazon projects include larger fulfillment centers as well as smaller hubs — primarily in rural areas — that function as staging locations for final deliveries to customers. They are also part of an overhaul of the company’s formerly nationwide distribution network into one broken into nine regions, which company officials said would help localize supply chains near consumers.

“If we can place those items at facilities that are closest to customers upfront,” Amazon operations executive Udit Madan told the paper, “it allows us to offer both fast speeds and lower our cost to serve.”

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