When it comes to picking the locations of your DCs, it is important to observe the trends in e-commerce and the need to deliver to customers in metro markets.
Pace of Fulfillment Center Construction Continues On, but Now Focus is On Major Metro Markets, not Low Cost, Less Developed Areas
SCDigest discussed observations of Amazon’s network strategy and how it is evolving. They show a diagram from MWPVL which shows that the existing network (blue dots) has been largely in more rural areas, or at least not highly urban – regions where land and labor costs were lower. However, now the facilities under construction are generally in urban areas – the New York City area, Chicago, Philadelphia, etc., as shown in the larger red dots.
Amazon is now looking for the a fast level of order turn-around time (i.e., same day) for all major cities within the US. This is a different approach from the past which focused more on cost.
Amazon’s Warehouse Expansion Goes Unabated As A Means To Unchallenged Dominance
Amazon is working on providing Increasingly faster deliveries of online orders — including same-day shipments — to shoppers’ homes. This means they need more distribution centers in metro areas.
Consumers now expect on time delivery to be within the two to three day range. This is just the minimum expectation. The trend is moving from shipping out of a specific warehouse choosing a closer warehouse to serve customers, with faster delivery and cheaper transport costs.