Amazon plans to double its number of same-day or next-day delivery centers in major cities across the country as the e-commerce giant looks to build on its initial success in trying to get packages to customers faster and more efficiently.
The Seattle-based company is showing progress in its efforts to cut its order fulfillment costs by shifting to a regional delivery network from a national fulfillment network to fill orders faster, CEO Andy Jassy told investors during the company's second-quarter earnings presentation.
“The experience has been so positive for the customers in our business that we’re planning to double the number of these facilities,” Jassy said. “We believe we’re far from the law of diminishing returns in improving speed for customers.”
Amazon had at least 45 of the facilities called sub-same-day fulfillment centers, totaling about 7.6 million square feet, for an average building size of just under 170,000 square feet, in the United States as of the first quarter, according to MWPVL International, a Montreal-based logistics consulting firm that tracks projects across North America.
The company said it delivered packages at the fastest speeds ever in the second quarter, with more than half of orders arriving the same or next day across the 60 largest U.S. cities.
The company said it has nearly quadrupled its number of products delivered by the same or next day this year compared with the same time in 2019, helping it achieve a second-quarter profit of $6.7 billion after a loss of $2 billion for the same time a year earlier and an 11% increase in revenue to $134.4 billion.
Now, the company plans to roll out more of its smaller same-day and next-day delivery centers located closer to large metropolitan areas where the company fulfills, sorts and delivers products from a single location, Jassy said.
Amazon made headlines in early 2022 when it announced plans to slow its real estate expansion and offer more space for sublease.
It turns out that the changes to the way Amazon uses some of its industrial property has cut the total number of miles traveled to deliver packages by 19%, Jassy said.
The company has also looked to reduce costs by launching a service called Amazon Hub Delivery in the United States. Under the program, Amazon pays local businesses such as florists or dry cleaners to deliver its packages, with the goal of making agreements with 2,500 businesses in 23 states by the end of the year.