Amazon.com, Barnesandnoble.com Gird for Holiday FulfillmentAmazon.com this month appointed Jeffrey Wilke the new head of logistics, replacing Jimmy Wright, 45, who plans to retire.
Wilke will oversee the expansion of Amazon's shipping and distribution operations in time for the holiday season. Amazon.com, Seattle, will add 3 million square feet of warehouse space this year.
"We are on track to deliver our commitments this year," said Joe Galli, president and chief operating officer at Amazon.com. "But we have said from the beginning that there are some start-up risks ... and some situations we have to smooth out."
The company plans to open five centers later this year: a 750,000-square-foot facility in Coffeyville, KS; a 770,000-square-foot operation in Cambellsville, KY; a 600,000-square-foot facility in Lexington, KY; a 332,560-square-foot center in Fernley, NV; and an 800,000-square-foot facility in McDonough, GA.
This will give the company 3.5 million square feet of space at seven distribution centers nationwide by the holidays, more than 10 times what it had the same time a year ago.
Barnesandnoble.com, New York, also plans to expand its distribution operations with two centers scheduled to open next year. They will be dedicated to Web orders, reducing the load on Barnes & Noble's retail distribution center in New Jersey.
The first of the new centers is scheduled to open in May and will be in Memphis, TN, home of FedEx and several other courier services. It will employ up to 600 people. The second center will be in Reno, NV, although the company has not announced an opening date.
"It is a major initiative for barnesandnoble.com," said Gus Carlson, a spokesman for the company.
At least one analyst agreed. "It makes a lot of sense to bring fulfillment in-house, and this definitely gives [barnesandnoble.com] some competitive differentiation over other players in the field, because a lot of the competitors are working with the same outsourced distributors as each other," said Stacie McCullough, business applications research analyst at Forrester Research, Cambridge, MA.
Taking control of order fulfillment is one of the best ways to guard against customer defection, funding attrition and other distribution nightmares, according to McCullough.
The new centers won't be open in time for the holiday selling season, but barnes-andnoble.com will hire more than 100 warehouse staff to handle the expected 40 percent increase in order capacity, the company said.
A new report from Forrester predicts that the demand for order-fulfillment solutions will reshape the existing fulfillment scene as suppliers evolve to serve the small-package, individual-oriented needs of commerce site operators.
To date, most Net sellers have limited the number of products offered on their sites and executed fulfillment in-house. But as sales grow, large volumes of small parcels and rising customer expectations are putting new pressures on order-fulfillment systems.
Forrester predicts that over the next two years new outsourced companies and services will evolve to deliver end-to-end solutions to smaller online players. These companies will offer improved drop-ship services and provide a range of options for residential deliveries, which are expected to exceed 2.1 billion by 2003.
The report is based on information gained from interviews with 40 vice presidents of operations from retail, Internet and manufacturing companies - all of which have an online presence.
Less than half the respondents indicated their companies make a profit on each shipped package, and most fail to accurately measure the total cost of fulfillment. Eighty-five percent don't fulfill international orders because of the complexities of shipping across borders.