Amazon plans to double the number of warehouses that are dedicated to making same-day delivery to customers. It is a strong sign that the company is more determined than ever to compete with Walmart
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Same day delivery for some items is already in 90 metropolitan areas, according to the company. This means that there is an intensification of delivery now underway and the consumer will clearly like it. The expansion of same-day delivery will rely on smaller warehouses that are closer to customers than traditional Amazon fulfillment centers.
This is a regional fulfillment strategy of getting wanted products to the customer faster than ever. Amazon claims that it is cutting costs by driving fewer miles and have fewer package hand-offs. Doug Herrington, CEO of Worldwide Amazon Stores, now has plans to double the volume of same day delivery “in the coming years”.
One remembers that frequently merchandise was delivered in New York from a West Coast location. Now, the company has eight interconnected regions that will enable Amazon to cut the shipping distance to customers by 15 percent. As a result of using this new system, 76 percent of the orders are filled within the customer’s region.
Herrington also notes that same-day facilities average just 11 minutes to pick a customer’s item and put the package on an outbound truck. It is more than an hour faster than a traditional warehouse pick process.
According to Marc Wulfraat, president of the supply chain consulting firm MWPVL International (as quoted by The Informer), Amazon currently operates 48 sub-same-day (SSD) facilities that cover 100,000 to 330,000 square feet and fulfill orders in less than five hours. Wulfraat notes that four additional fulfillment centers are under construction and Amazon could scale up to 150 locations in the next three years.
This is certainly a way for Amazon to differentiate itself from competition. The customer likes fast delivery, and management recognizes the need to schedule more same day delivery locations as a way to gain a competitive edge.
POSTSCRIPT: Quick delivery via regional fulfillment/shipping has many benefits. For Amazon, it will provide more efficient and cost savings fulfillment and likely lead to higher customer satisfaction as well. I can even imagine that such fast delivery, especially for fashion merchandise, will reduce returns because a customer will be able to immediately wear the merchandise and be happy for that convenience. A lower return rate will lead to more savings as the need for restocking merchandise (and assuring it is in original packing, etc.) is avoided. At the moment, Amazon has a very liberal return policy that could change when faster deliver covers the country. I am happy that the faster delivery does not increase coats and will satisfy more customers.
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