Amazon keeps pushing for faster L.A. delivery

amazon7.jpgCouple of months back my wife and I ordered a set of highball glasses from Bloomingdale's and were told that delivery would take about four weeks. Then came word after several weeks that the item was back-ordered and wouldn't arrive on time. We canceled the order, bought the same item on Amazon, and had it on our doorstep in two days. That sounds like a testimonial, but it's just the online reality of shopping on Amazon compared with shopping on other sites, especially those with brick-and-mortar foundations. Amazon's deal with the U.S. Postal Service to begin Sunday delivery, starting in L.A. and NY, is part of a broader strategy that brings merchandise to customers as quickly as possible. The company is even dabbling with same-day delivery, notably for the Amazon Fresh grocery program, but a next-day or two-day turnaround is more realistic for now. None of which is cheap or easy - last month, the company announced plans for a 1.2 million-square-foot logistics center near March Air Reserve Base in Moreno Valley. Already, Amazon has a 1 million-square-foot warehouse in San Bernardino. Amazon's spending on fulfillment jumped more than 40 percent annually from 2010 to 2012, compared with 24 percent in 2009, according to Bloomberg. Such spending has eaten into margins, which might be easier to get away with at Amazon than, say, Macy's, which owns Bloomingdale's. But it generates loyal customers like me who love the idea of getting something in days rather than weeks. From Bloomberg:

Amazon decided new centers would have multiple floor levels and dense rows of floor-to-ceiling shelves. The company has increased the height and square footage of the buildings, and is using more cubic space within each. "We now get about twice as much product in this building as we would have four or five years ago," said [Dave Clark, vice president of worldwide operations and customer service]. The company also about doubled the number of items it can ship weekly out of a center like the one in Chattanooga, Clark said. That's because it improved a process called sortation, or how efficiently it can combine multiple items of different dimensions, which may be on opposite ends of the warehouse, in a box of the correct size. This has become more automated in the past five years through internal software and "commodity material handling equipment" called Amazon Fulfillment Engines, Clark said. The engines decide what a worker will pick next off a shelf, where that order will be routed to in the facility and where it will be combined with other items that eventually arrive as a single shipment to the customer. Amazon is now using cookie-cutter building designs too, speeding up how fast it gets each center to scale. It takes eight to 10 months to build and fill a center with shelves and people, down from a two-year process half a decade ago.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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