Our last Back Of The Envelope focused on Amazon’s money. Today we look at Amazon from an operational perspective. Amazon is striving to be a $500B vacuum for revenue. Amazon is an Alien with updated business methods and models based on their investments: logistics, warehouses, and automation.
Amazon’s investment across 250 warehouses in 2021 may add up to a 250 M sq ft footprint. Amazon is building warehouses that are up to 50 feet high instead of the 20th Century ’20 foot clear’ heights. Capital spending (‘capex’) for Amazon across 12 months at an estimated $53B is in the same realm as the $59.9B that 8 of the largest oil producers will invest in their energy businesses. Amazon’s additions to vacuum revenue are even larger than just the raw numbers. Consider our Back Of The Envelope numbers.
A 1M sq ft warehouse has 60% utilized by rule of thumb. Traditional warehouses have room for forklifts, people, and gadgets to move pallets. Amazon is building warehouses 4-5 stories high. With flexible mezzanines and robots, 4-5 floors 600,000 sq ft has the utilized space of 2.4 M sq ft in traditional layouts. Robots and automation squeeze the need for forklifts, use more vertical space, and cut labor. Amazon’s “Alien” logistics model turns 20th-century models upside down. Product vendors are getting their warehouse space six months free. Amazon has reduced the unpaid cost of warehouse space to tiny amounts while still getting paid for the space of products that don’t sell – making money each way.
Amazon has stated that it’s adding 250 new facilities in 2021. 150 in the beginning of the year and another 100 by the end of the year. While not identical our research shows fulfillment and logistics centers lead the way.
An Alien estimate for Amazon was $253 billion for 2021 North American On-line sales. Amazon is putting up warehouse-logistics (and revenue) capacity way beyond 2021 growth. A hint – Amazon’s growth Y-Y in 2nd half 2021 may be larger than a full year’s revenue at Macy’s plus Nordstrom’s. We believe Alien Amazon is striving to grow dramatically – and Alien targeting may come for your enterprise. More in our next post.
תגובות