This is an article that documents the Amazon global fulfillment center network. MWPVL International does not represent Amazon in any way and this article is only for informational purposes.
It all started in the July, 1994 when former investment banker Jeff Bezos left New York City for Seattle to launch a new on-line book store. Amazon.com took shape over the next 12 months and the company's web storefront recorded its first sale in July, 1995. By year-end 1996, Amazon.com had generated $15.7 Million in sales. On May 15, 1997 Amazon.com raised $54 Million of capital with an IPO on the NASDAQ (AMZN). The company grew at an astonishing pace with sales reaching $1.6 Billion by the end of 1999.
In 2000, Amazon took a sharp turn for the worse when a quarterly financial loss of $323 Million was reported. A subsequent quarterly loss of $200 Million sent the company share price tumbling by 70%. Losses continued through 2000 with Amazon reporting a massive $1.4 billion loss for the year. Speculation on the street was that Amazon would file for bankruptcy and the company's stock hit an all time low. In 2001, a major cost cutting and restructuring effort restored profitability to the firm and Amazon has not looked back since. Having said this, the company has still not generated any significant profits since this time.
From a distribution strategy perspective, Amazon started with two fulfillment centers in Seattle and Delaware. The original 93,000-square-foot Seattle facility was largely manual and now seems tiny relative to most of the new fulfillment centers being built today. The 202,000-square-foot facility in New Castle, Delaware was undoubtedly a brave gamble back in November 1997. In 1999, Amazon expanded by adding fulfillment centers in: Fernley, NV; Coffeyville, KS; McDonough, GA (later closed in 2001); Campbellsville, KY; and Lexington, KY. At the same time, Amazon expanded into Europe with fulfillment centers in Regensburg, Germany; Bad Hersfeld, Germany; and Marston Gate, UK. Things then went relatively quiet on the expansion front until 2005 and since then Amazon's fulfillment network has been growing at an incredible pace around the world.
As of May 2016, to the best of our knowledge, Amazon operates the following distribution infrastructure:
The Amazon Fulfillment Center and Distribution Center Network in the United States
Currently Amazon operates a variety of fulfillment and distribution centers in the United States including small sortable, large sortable, large non-sortable, specialty fulfillment centers, apparel and footwear, redistribution centers, returns centers, 3PL outsourced facilities, Amazon Fresh and Amazon Pantry facilities. A detailed listing of all Amazon Fulfillment and Distribution Centers appears in the table below. All figures provided are estimates based on our research. We have included the Zappos.com, Endless.com and Diapers.com fulfillment centers in our North American figures. Please note that the square footage figures below exclude mezzanine areas unless otherwise indicated.
The Amazon Sortation Center Network in the United States
Amazon currently operates a network of sortation centers across the United States to gain control of the last mile delivery process - for more information about Amazon’s sortation network click here. These buildings are key enablers to steer shipping volume away from UPS and FedEx so that packages can be delivered by USPS or other regional couriers. The purpose of these facilities is to sort packages by zip code to pallets that are then delivered to the post office responsible for each zip code. From there USPS performs the last mile delivery to the customer. This system was introduced to the U.S. in 2014 and has been instrumental in Amazon taking greater control over its outbound shipping costs. Sortation centers are typically, but not always, standalone buildings within the Amazon Network.
A detailed listing of all Amazon Sortation Centers appears in the table below.
The Amazon Delivery Station Network in the United States
In late 2013, Amazon launched a build-out of its delivery station distribution network consisting of smaller facilities that are typically in the 60,000 to 100,000 sq. ft. range. These buildings are positioned close to large metropolitan cities across the country and quite often they are positioned near to airports. The delivery stations primary role is to unload merchandise from incoming containers and prepare outbound loads for local last mile delivery to the customer. Many of them are multi-temperature in order to manage fresh food distribution to markets where Amazon Fresh is up and running.
The data concerning this network is sparse so we provide the best information available listing all known Amazon Delivery Stations in the table below.
The Amazon Prime Now Hub Network in the United States
In late 2014, Amazon launched a rapid build-out of its latest distribution network consisting of smaller footprint distribution buildings positioned close to the centers of large metropolitan cities across the country. Amazon’s Prime Now Hubs are typically stocked with the highest velocity items that are popular such as bestseller books. These facilities only stock a limited line of products (e.g. 10,000 different items) to enable Amazon Prime Now members to place orders for this merchandise and receive rapid delivery in as little as 60 minutes from the time of order placement. It is highly likely that this build-out will continue throughout 2016 and beyond. In effect, these buildings are the equivalent of retail stores for Amazon since they enable customers to receive their merchandise in 1 - 2 hours or same day.
The data concerning this network is sparse so we provide the best information available listing all known Amazon Prime Now Hubs in the table below.
- Definitions of fulfillment center types:
- Small Sortable fulfillment centers generally house smaller items that can all fit in one box/shipment (e.g. books, DVDs, watches, etc.)
- Big sortable fulfillment centers generally house larger items that can all fit into one box / shipment (e.g. products > 18”)
- Non-sortable fulfillment centers generally house items (usually because of size) that can not be sorted into a box with other items. These are items that cannot be placed onto a conveyor belt for automated sortation.
- Replenishment centers generally receive product from vendors and then move these products to other fulfillment centers.
- Customer returns centers process all Amazon customer returns.
- Specialty sites fulfill specialty items sold by Amazon such as text books, jewelry, clothing and shoes.
- Amazon Fresh and Pantry sites service home delivery of Dry grocery, Perishables and Frozen merchandise.
- Sortation centers are generally used to sort packages out by zip code whereby the packages have originated from a fulfillment center elsewhere in the Amazon network.
- Prime Now Hubs and Flex Hubs are smaller facilities that stock a limited line of products that are in high demand such that customer orders in highly population urban centers can be delivered within 1 - 2 hours of order placement.
- Delivery Stations are mid-sized facilities between 60 - 100,000 sq. ft. designed to service same day home delivery of Dry, Perishables food and general merchandise to customers in key urban locations and to also support Amazon Flex.
- Fulfillment centers that have been closed or converted include:
- McDonough, Georgia. Originally opened as the company's 5th fulfillment center in October, 1999. This 800,000 sq. ft. fulfillment center employed 450 associates and was closed in 2001 after business slumped and cutbacks were necessary.
- Seattle, Washington: Restructuring plans in 2001 led to this 93,000 sq. ft. fulfillment center to be converted to a seasonal facility.
- Grand Forks, North Dakota: This 130,000 sq. ft. power tools fulfillment center was originally opened in 1999 when Amazon bought the catalog division of Acme Electric, a local hardware store. Amazon closed the fulfillment center in March, 2005 eliminating 50 jobs, but the company converted the operation into a call center which in turn created 60 jobs.
- Red Rock, Nevada: Originally opened in January, 1999. This 322,560 sq. ft. fulfillment center was closed in March, 2009 as part of the closure of 3 fulfillment centers when the company transferred volumes to other facilities to streamline operations.
- Chambersburg, Pennsylvania: This 420,000 sq. ft. fulfillment center was closed in March, 2009 as part of the closure of 3 facilities when the company transferred volumes to other fulfillment centers to streamline operations.
- Munster, Indiana: Originally opened in October, 2007, this 75,000 sq. ft. fulfillment center was closed in March, 2009 as part of the closure of 3 facilities.
- Irving, Texas: Originally opened in 2005, this 493,290 sq. ft. facility was closed in April, 2011 after a tax fight with the state of Texas. The Texas comptroller's office sent Amazon a demand for $269 million in uncollected sales taxes, plus penalties and interest from 2005 through 2009. The state contended that Amazon was responsible for sales taxes not collected for on-line sales made in Texas because its fulfillment center was in Irving. Amazon closed the facility and 119 jobs were lost as a result.
- The Fernley, NV fulfillment center (786,000 sq. ft.) which was opened in January, 1999 was closed in early 2015. This facility has been relocated to a newer 634,000 sq. ft. facility in Reno, Nevada.
- The Coffeyville, KS fulfillment center (TUL1: 915,000 sq. ft.), which was opened in April 1999, was closed in Feb. 2015 as Amazon realigned its distribution network to be closer to larger metropolitan cities. The original strategy that pushed the company into the rural areas of America was based on avoiding the need to charge consumers with sales tax. Since this competitive advantage is coming to a close, the company has moved its fulfillment centers closer to concentrated points of demand to reduce its outbound transportation expense.
Discussion on the Amazon North American Fulfillment Network:
Amazon's fulfillment network strategy is interesting because it does not necessarily reflect an optimized distribution network in terms of serving the U.S. population from the geographical locations that are closest to the markets served. Until 2013, fulfillment center locations in the U.S. were determined based on state tax considerations. Sales taxation laws vary from state to state within the country and since we are not experts on this topic, we thought it best to click here for more information on this topic. In short, Amazon sells most of its merchandise through fulfillment centers which are not technically classified as retail stores. As such, the company is technically within the letter of the law to not charge sales tax to consumers with the exception of five states. Over time, this has provided Amazon with a significant competitive advantage over conventional retailers that have retail stores since these companies must charge state taxes at the time of purchase (States lose an estimated $23 billion a year in uncollected sales taxes from web retailers). Currently 28 states have introduced Internet sales tax legislation that is already on the books with more states expected to follow shortly.
In the years leading up to 2013, Amazon invested significant capital into facilities in Arizona, Tennessee, Pennsylvania, Kentucky, Indiana, Delaware, South Carolina and Virginia - all states that made tax collection deals with Amazon in exchange for agreements to guaranteed job creation targets over time.
Ultimately, Amazon stopped fighting the sales tax war as it was inevitable that its competitive tax advantage was not going to last forever. Today, Amazon collects taxes from Texas, California, New York and Florida and this will eventually apply to most states across the country. After all of the tax deals go into effect, Amazon will essentially be collecting sales taxes from the majority of American consumers. Amazon's tax capitulation is directly related to a major shift in the company logistics strategy. Instead of shipping to customers in highly populated urban centers from massive fulfillment centers constructed in faraway low cost states, Amazon has built out a vast distribution network fulfillment centers positioned close to large metropolitan cities. The new Amazon distribution strategy calls for the fastest level of order turnaround time (i.e. same day or next day) for all major cities within the United States. The goal is to enable same-day delivery as an option for at least half of its U.S. customers. Since the onset of the e-Commerce era, this goal has been a dream but the high cost of establishing the required distribution infrastructure has been a barrier towards achieving this goal. Amazon is now investing heavily to make fast response a reality and the build-out of the Prime Now Hub network will enable Amazon to service the top cities in America within 1 - 2 hours of order placement.
Amazon has also announced a strategy to make a move into the Grocery industry with home delivery service to be established in major metropolitan markets. Amazon Fresh is already established in Seattle, Los Angeles and San Francisco. The company has been rolling out Amazon Fresh and Amazon Pantry to numerous other large metropolitan cities to enable customers to order fresh food and dry grocery merchandise with same day delivery.
Lastly, it is important to note that Amazon has now established a U.S. distribution network of sortation centers that will enable the company to increase its control over the last mile delivery to the customer. Parcel shipments from nearby fulfillment centers are transferred to a regional sortation center where they are sorted by zip code and then transferred to neighborhood post offices so that the United States Postal Service can perform the delivery for a lower cost than the national parcel carriers (UPS and FedEx). This strategy enables Amazon to control the delivery process up to the last mile and it is also a key enabler to providing Sunday delivery in conjunction with USPS (this partnership was announced in November, 2013). For a detailed explanation of how the Amazon new sortation network works click here.
The maps below represent Amazon's current Fulfillment and Sortation Center networks.
The Amazon Fulfillment Network in the Rest of the World
Currently, Amazon operates fulfillment centers outside of the United States in Canada, Mexico, Brazil, the United Kingdom, France, Germany, Italy, Spain, Poland, Czech Republic, China, Japan and India.
In Europe and Japan, the emergence of smaller delivery stations and Prime Now Hubs is enabling rapid regional delivery capability. A detailed listing of existing and projected fulfillment centers appears in the table below. Most countries use a value added taxation (VAT) system to collect retail sales tax up front at the time of purchase hence the taxation issue does not impact Amazon's fulfillment network outside of the United States. Please note that the square footage figures below exclude mezzanine areas in most cases unless otherwise stated.
The Amazon Prime Now Hub and Delivery Station Network in the Rest of the World
Amazon has operated an extensive network of third party operator delivery stations in the UK since 2013 and the success of this program ultimately led to the expansion of the concept into the United States. In late 2015 the company rolled out 15 Prime Now Hubs in Germany and now Japan is being rolled out as well. Our list of these facilities is undoubtedly incomplete but below is the information that is currently available.
Map of Amazon United Kingdom Distribution Network
Map of Amazon France and Italy Distribution Network
Map of Amazon Spain Distribution Network
Map of Amazon Germany, Poland, Czech Republic Distribution Network
Map of Amazon Japan Distribution Network
Map of Amazon China Distribution Network
Map of Amazon India Distribution Network
Legend / Notes:
- Facilities that have been canceled or closed include:
- Iwanuma City, Miyagi, Japan: Originally planned for April, 2011, the plans for this fulfillment center were cancelled after the tragic earthquake and subsequent tsunami hit the region on March 11, 2011.
- Amazon NG01 (4-11-3 Centrair, Tokoname-shi, Aichi, Japan, 479-088 opened April, 2011 and closed 2013 - was replaced by FSZ1)
- Amazon HND1 (3-5-1 Yoshinodai, Kawagoe-shi, Saitama, Japan, 350-0833 opened April 2011 and closed in 2013 - ).replaced by FSZ1)
- Ichikawa-shi (1-9-2 Shiohama, Ichikawa-shi, Chiba-ken 272-0127) opened in 2000 and closed in 2005 - replaced by NRT1
- New facilities on the horizon:
- Australia: Unconfirmed rumors are circulating that Amazon will be entering the Australian market which has an estimated on-line retail sales of $12.3 Billion/year. Australian customers are currently serviced from Germany so this move will reduce shipping costs and improve their competitive position for this market.
Marc Wulfraat is the President of MWPVL International Inc. He can be reached by clicking here. MWPVL International provides supply chain / logistics network strategy consulting services. Our services include: distribution network strategy; distribution center design; material handling and automation design; supply chain technology consulting; product sourcing; 3PL Outsourcing; and purchasing; transportation consulting; and operational assessments.
Legal disclosure: MWPVL International Inc. does not represent or have a business relationship with Amazon. This is a research paper for supply chain educational purposes. The information assembled in this research paper is intended to provide the audience with intelligence on the subject of world class strategies for distribution networks. In preparing this material, MWPVL International Inc. has not disclosed any private or confidential company information. MWPVL International Inc. has made every effort to ensure that the information contained within this white paper is as accurate and as up to date as possible. However, it is important to note that distribution networks change over time and for this reason there is a possibility that information contained within this paper may be out of date or inaccurate. If you wish to submit any information to improve the quality of this white paper, please be sure to send us some feedback.