Amazon Gets Ready to Roll Out New DCs in Six StatesSeptember 4, 2012
According to a recent report in the online magazine Slate, the retail giant Amazon has committed to building or leasing new distribution centers in at least six states, including New Jersey, Virginia, Tennessee, Indiana, Texas, and California. The company is expected to hire 10,000 new workers in California alone over the next four years. Amazon already has 34 warehouses and distribution centers in North America.
A number of states have passed laws that imposed sales taxes on Amazon’s business, and the company had continually resisted those mandates. But according to Slate and a series of reports in the Financial Times, Amazon has done an about-face and has signed agreements to collect sales taxes in some of those states. Why? By agreeing to collect sales taxes, Amazon can legally open warehouses and DCs in some of the nation’s most heavily populated areas.
So why is Amazon so eager to build so many distribution centers in states where it previously did not want a physical presence? By all accounts, Amazon’s intense expansion supports its plan to make overnight delivery standard and offer same-day delivery for an additional fee. Amazon can only achieve that level of service by locating more warehouses closer to large population centers and by making its warehouses hyper-efficient.
Recent reports suggest that the retailer is already close to achieving the next-day delivery standard. Same day delivery is already being testing in select California markets.
With Amazon raising the anti dramatically and almost without notice, traditional retailers should beware and begin an immediate assessment of their own supply chain.
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