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Amazon kicks warehouse-building efforts into high gear

  • Bloomberg observes Amazon (AMZN -0.6%) has spent nearly $13.9B to build 50 new fulfillment centers since 2010, and that the e-commerce giant had 89 of them worldwide at the end of 2012 (5 more have been announced this year).
  • Amazon's efforts to lower delivery times, both for its own goods and those of its merchant partners, have much to do with this spending binge. Consulting firm MWPVL thinks Amazon could offer same-say delivery to 50% of Americans (up from a current 15%) by placing fulfillment centers closer to the top-20 metro areas.
  • FastCompany recently took note of AmazonFresh's role in the company's same-day efforts.
  • Accompanying the warehouse-building are behind-the-scenes attempts to improve efficiency, such as adding machinery and floor levels. "We now get about twice as much product in this building as we would have four or five years ago," says an Amazon exec about a TN facility.
  • Amazon's fulfillment expenses rose 35% Y/Y in Q2 to $1.84B, outpacing rev. growth of 22% and amounting to 12% of revenue.
Comments (3)
  • Paulo Santos
    , contributor
    Comments (17883) | Send Message
     
    This is misleading, as there are significant signs that AMZN is slowing down investment in warehouses, which is quite contrary to saying it's kicking those investments into high gear.
    21 Aug 2013, 12:38 PM Reply Like
  • 426260
    , contributor
    Comments (129) | Send Message
     
    The $13.9B total represents Fulfillment operating expenses, which includes a lot more than just depreciation on fulfillment centers.

     

    Total capital expenditures between 2010 - 2013, according to the Amazon 10-K, were about $6.6B (see below):

     

    "Capital expenditures were $3.8 billion, $1.8 billion, and $979 million in 2012, 2011, and 2010, with the increases primarily reflecting the purchase of property in 2012, and additional investments in support of continued business growth due to investments in technology infrastructure, including AWS, and additional capacity to support our fulfillment"
    21 Aug 2013, 02:50 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17883) | Send Message
     
    Add to that the fact that most of AMZN's warehouse building is outside the balance sheet, in operating leases.

     

    Anyway, there are signs that the investment in warehouses has slowed down already. And it's really weird to call "investment" to ongoing fulfillment expenses including credit card charges, picking and packing the stuff that's sold, etc.
    21 Aug 2013, 02:52 PM Reply Like
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