Amazon is using a smaller version of its warehouses to efficiently fulfill orders in urban areas where it can be difficult to fit full-size warehouses, according to The Wall Street Journal.
It’s using this concept in several US cities; its New York City location is 20% smaller than its average warehouse but is able to facilitate 50% more inventory since it uses twice as many human and robot workers, which helps the e-commerce giant try to bring the fastest delivery possible to urban areas.
Here’s what it means: E-tailers are finding ways to bring fulfillment processes closer to cities to provide faster delivery while contending with cities’ limited available real estate.
- Amazon and Jet.com have both opened warehouses in New York City to make speedier deliveries. In addition to Amazon’s Staten Island-located warehouse, Walmart-owned Jet.com opened a warehouse in the Bronx in 2018. While Amazon’s 855,000-square-foot location dwarfs Jet.com’s 205,000-square-foot facility, both companies are trying to fit warehouses closer to cities to make delivery faster, and they’re scaling down their operations to make this possible despite the space constraints cities face.
- E-tailers are also experimenting with other ways to get products to urban consumers faster, including ship-from-store and personal shopping. In addition to scaled down warehouses, Amazon’s Prime Now delivery from Whole Foods is one way to offer speedy delivery because orders are sourced directly from stores. Walmart, meanwhile, is testing a personal shopper service in New York City where employees gather products for customers from various stores and sources, enabling same-day delivery speeds in cities without a traditional warehouse-driven fulfillment process.
The bigger picture:Providing fast fulfillment in cities is imperative for e-tailers’ success because the population is flocking to urban areas and consumers expect fast delivery.
- The majority of consumers now live in urban areas, making them key areas of focus for retailers. Urban areas have accounted for a majority of the global population since 2007, according to estimates from the World Bank, and their share had climbed to almost 55% of the total population by 2017. This makes cities key targets for retailers because there are simply more opportunities to make sales in those markets, so retailers need to work to attract urban consumers.
- And fast shipping is a key value for consumers, so being able to provide it in cities could woo this important demographic. A whopping 80% of consumers said that one-day free shipping would convince them to buy an identical product from one e-tailer over another. As e-commerce competition in cities continues to heat up, the e-tailers that offer the fastest delivery options, while keeping their delivery fees down, will be able to thrive.