Amazon is packing more stuff into warehouses: Here’s why it matters

Amazon is packing more stuff into warehouses: Here's why it matters

Most of these enhancements are being pushed by automation, with robots and machines dealing with a better quantity of warehouse work, Dhanorkar mentioned. Amazon, which spent $775 million on robotics firm Kiva Programs in 2012, reportedly has over 100,000 robots in its success facilities world wide. Mark Might, an analyst at Citigroup, wrote in a notice on Friday that Amazon plans to make 20,000 fewer vacation hires this yr due to automation.

Following Olsavsky’s feedback on the decision, Nomura analyst Simeon Siegel wrote that Amazon is constant to seek out methods to make higher use of area.

“Curiously, administration famous that they could start to consider cubic footage, which can recommend an extra utilization of top inside their facilities, discovering additional extremely economical footage in present places,” Siegel wrote.

It is an industry-wide drawback. The surge in on-line purchasing has led extra retailers to hunt out space for storing. Demand for industrial actual property — principally e-commerce warehouse and distribution facilities — has outstripped provide for 34 consecutive quarters, in response to a current report from CBRE Group.

Tarek Abdallah, a professor at Northwestern College’s Kellogg Faculty of Administration, mentioned multi-story warehouses are significantly helpful for Amazon and different firms that need to be nearer to cities to allow them to velocity up deliveries to prospects.

“The true property worth may be very excessive in extremely dense city areas,” mentioned Abdallah, who researches operations administration. “This strategic transfer is essential for Amazon as a result of they need to resolve the final mile drawback.”

With that development, cubic ft turns into a extra logical strategy to measure warehouse capability, mentioned Douglas Hales, a provide chain administration professor on the College of Rhode Island. The primary U.S. multi-story warehouse was solely introduced in 2016.

“Cubic ft is unquestionably being adopted by numerous firms that use multi-level distribution facilities,” Hales mentioned.

Correction: On the finish of 2017, Amazon occupied virtually 200 million sq. ft of area in its warehouses and knowledge facilities.

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