Amazon adds a network of warehouses closer to cities to expedite same-day delivery

(Reuters) – Amazon.com Inc (AMZN.O) has quietly opened a number of small warehouses closer to major US cities in an attempt to shave hours from delivery times, the company told Reuters.

An overview of the product preparation area of ​​the Amazon logistics center is available in Baltimore, Maryland, United States, April 30, 2019. REUTERS / Clodagh Kilcoyne

The world’s largest online retailer is updating its same-day delivery schedule for buyers in Phoenix, Philadelphia, Dallas and Orlando on Tuesday. Amazon will ensure that the packages arrive every day multiple times.

The initiative underlines the company’s goal of staying fast in online retailing, outperforming the free two-day delivery offers of the competition, so that shoppers remain loyal to the Amazon Prime shipping and streaming media club, which costs $ 119 per year in the United States.

Amazon has long offered an hour or two of delivery through Prime Now, a service that includes fresh groceries and over 20,000 items.

The offer on the same day will ensure the delivery of over 100,000 products, from phone chargers to dog food, in just five hours, from a new warehouse near each launch city, said Jon Alexander, director of the delivery experience of Amazon. For comparison, Amazon offers over 100 million items for delivery to the U.S. in two days or faster through Prime.

“The smaller selection allows us to bring these types of structures closer to customers,” he said. Other items – up to 3 million – will go through facilities on the street for customers on the same day.

The new format combines the storage, collection and packaging functions of Amazon’s logistics centers with the sorting and delivery functions of other facilities in a single building.

Compared to the fulfillment centers, which are further away from urban centers and house far more inventory, the new warehouse is roughly one tenth the size, at 100,000 square feet. Amazon says shorter driving times will help it meet its carbon footprint.

The company declined to comment on the cost of the facilities. Amazon, once famous for spending profit, often cites warehouse deposits as one of its major areas of investment.

According to Alexander, Amazon generally rented the existing spaces and modified them to adapt to the operation.

The new structures are automated with the same “drive units” used in Amazon logistics centers. These are squat robots that run on the floor that raise mobile inventory shelves and bring them to the associates who choose customer orders. Amazon has said that each building will create hundreds of full-time and part-time jobs.

While the same day option is covered for Prime members who spend at least $ 35, those without Prime members pay $ 12.98 per order, a tactic that could cause people to sign up.

Amazon will announce more cities for the program later this year, Alexander said.

Reporting Jeffrey Dastin to San Francisco; Editing by Greg Mitchell and Kenneth Maxwell

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