Amazon.com (AMZN) reportedly is planning to open 1,000 small delivery hubs in cities and suburbs across the U.S. in a bid to bring products closer to customers, and make online shopping even faster than a run to the store.
Citing people familiar with the plans, Bloomberg reported that Amazon was looking set up the mini versions of its massive fulfillment centers to take on the likes of Walmart (WMT) , Target (TGT) and others who get goods to customers’ doors fast.
Amazon was forced to scrap its two-day delivery pledge as the Covid-19 lockdown flooded the company with more orders than it could handle. While delivery times have improved thanks to the hiring of 175,000 new workers, Amazon is now looking to reinstate its pledge to deliver products to Prime subscribers on the same day.
Indeed, according to Bloomberg, Amazon is doubling down on those efforts by investing billions in building out small delivery hubs in now-empty big-box stores, shopping malls and even car dealerships, Bloomberg said - moving closer to fulfilling CEO Jeff Bezos’s long-standing aspiration of closing the gap on the “last mile” - the toughest and costliest part of delivering.
The company’s appetite for real estate is so strong that analysts have speculated that Amazon could convert vacant department stores into distribution centers. However, obvious obstacles such as department stores being two stories and less obvious ones such as zoning bylaws and mall-leasing restrictions are likely to keep Amazon’s location choices more select.
Even so, Amazon will still need people to help pluck, pack and deliver goods - something it is looking to ramp up ahead of what it expects to be extremely high demand this coming holiday shopping season.
“Even before Covid, the shift to e-commerce was already impacting retail. Amazon’s interest and focus on being embedded in cities and neighborhoods is simply an affirmation of that trend,” said Andrew Moffs, senior vice president and portfolio manager at Toronto-based Vision Capital, an alternative investment manager focused on publicly-traded REITS and real estate securities.
“As the world of retail real estate continues to shift from serving in-person consumers to delivering goods to peoples’ doors, it makes sense for the likes of Amazon.com to be scouting malls and other commercial real estate locations to set up.”
Meantime, Amazon last week confirmed plans to hire as many as 100,000 full- and part-time employees across the U.S. and Canada to work in its growing network of fulfillment centers at starting wages of least $15 an hour.
Shares of Amazon were up 0.27% at $3,147.61 in trading on Wednesday.