In four U.S. cities (Phoenix, Orlando, Dallas, and Philadelphia), Amazon Prime members enjoy even faster delivery options than people in the rest of the country. That’s because Amazon chose those locations to test out its mini-fulfillment center idea, in which smaller warehouses would stock about 3 million items each, putting them in closer proximity to consumers. The novel formats of these centers, each about one-tenth the size of a conventional distribution center, allows them to perform multiple supply chain operations—procurement, sorting, and delivery—in one place. Delivery drivers, most of whom function according to Amazon’s Flex service, pick up the items directly from the mini-fulfillment centers and get them to customers within just a few hours of their order. For example, an order placed between 5:00 p.m. and midnight ensures delivery by 8:00 a.m.; if shoppers instead place their orders after midnight but before 8:00 a.m., they can expect to receive delivery by 1:00 p.m. In addition to making its same-day delivery even more precise and rapid, Amazon believes that the new design can lower its environmental footprint, because deliveries do not have as far to go. It also might be a strategy to stem the vastly increasing shipping costs that the retailer has experienced; for example, in the first quarter of 2019, costs for shipping items to customers, most of whom have come to expect same-day delivery for all their purchases, had increased by 46 percent compared with the previous year. If these multipronged benefits are borne out by the four-city experiment, we should expect to find Amazon mini-fulfillment centers dotted across the country soon.
Source: S.L. Fuller, “Amazon Launches Faster Same-Day Delivery with Mini-Fulfillment Centers,” Retail Dive, March 4, 2020