Amazon’s Massive Distribution Network in One Visualization
View the high resolution version of today’s graphic by clicking here.
Last year, Amazon shipped over 5 billion (with a “B”) Prime packages, and the retail giant’s ecommerce market share in the U.S. is on the verge of surpassing 50%.
Moving that kind of volume takes an impressive amount of technical sophistication, manpower, and distribution infrastructure. While Amazon does lean on third parties for deliveries and warehousing, the company is also building an increasingly expansive distribution network in an attempt to manage the entire process.
Today’s visualization, which uses comprehensive data from MWPVL International, examines the estimated 124 million square feet of active space in the U.S., as well as the 40 million in Amazon’s construction pipeline.
To create our graphical footprint of Amazon’s warehouses in the infographic, we’ve used satellite imagery of every Amazon facility in the U.S. and stitched it all together.
Pieces of the Puzzle
There are a few types of facilities that make up the vast network of Amazon’s warehouses:
Containers from foreign vendors can be held at a crossdock facility until more stock is needed at the fulfillment center. This is the back-end of the distribution chain.
Fulfillment centers are the most common type of facility in Amazon’s distribution empire, but they serve a wide variety of purposes.
Amazon began building its distribution network in 1997, starting with two fulfillment centers in Seattle and Delaware. The two spaces would be tiny compared to today’s standards at 93,000 and 202,000 square feet, respectively. Now, there is nearly 100 million square feet of active fulfillment center space, with another 35 million on the way.
These facilities are responsible for sorting packages by zip code which are then typically delivered to USPS sites. Since being introduced in 2014, sortation centers have allowed Amazon to speed up the delivery process and to help control the distribution process up to “the last mile”.
In urban areas, delivery stations are often the last step in the chain before packages reach a customer. Courier companies – and increasingly Amazon Flex drivers – typically handle these short-range deliveries. These stations are often located near airports.
Prime Now Hubs
These smaller locations are specifically designed for speed. Prime Now hubs carry a more limited selection of items – including Whole Foods inventory – that are delivered within two hours of clicking “buy”. There are currently around 50 of these facilities in urban areas around the United States, but that number is expected to increase dramatically in the near future.
Prime Air Hub
Amazon doesn’t own its own airport yet, but the recently announced $1.5B international Prime Air Hub is a step in that direction.
The 210-acre parcels will help Amazon expand its Prime Air fleet while reducing its reliance on companies like UPS and FedEx. Kentucky is a natural choice for the hub as there are already 11 fulfillment centers in the state.
Fighting for the Last Mile
Over the years, Amazon has optimized every aspect of the distribution system, but one final hurdle remains.
Conquering the last mile – the final leg before a package reaches its destination – has proven tricky, in part because USPS already has a well-honed strategy for delivering to all the nation’s residents.
The company’s earnest recruitment drive for Amazon Flex is the latest in a long line of attempts to decrease reliance on third parties for package delivery. Also, by tapping into on-demand labor, Amazon hopes to reduce costs and have more flexibility during volume surges like Black Friday.
This desire to own the entire process is being reflected in the company’s roster of distribution facilities. The massive fulfillment centers aren’t going anywhere, but we may see a lot more smaller delivery hubs in cities and towns across America.
The Impressive Stats Behind Amazon’s Dominance of the Cloud
Do you watch Netflix or use Facebook? If so, then you are indirectly leveraging Amazon’s incredible scale and dominance of the cloud.
To the average person, cloud computing must seem quite magical.
All at once, the cloud provides instant access to all of your data, photos, music, and applications, without you having to store any of that data locally. In fact, users can access the cloud from practically anywhere in the world, and across multiple devices and platforms.
Yet, this all happens without you actually seeing any visible infrastructure. With data now being created at record speeds, where the heck is all this information being physically stored?
The Rise of AWS
Even though you can’t see the vast infrastructure that runs the cloud, it does exist somewhere.
As today’s infographic from RapidValue shows, much of this infrastructure is owned and operated by Amazon, through its extremely profitable subsidiary of Amazon Web Services (AWS).
Here are the key stats on this dominant service that powers much of the internet today:
Amazon Web Services (AWS) quietly launched in 2002, and in a short time has been able to scale into the largest single player in cloud computing (IaaS, PaaS).
While it is a well-known name to software developers, AWS emerged on a more mainstream basis once its financials were separated from those of parent Amazon.com.
Even in 2018, AWS delivered most of Amazon’s operating income.
AWS By the Numbers
To understand the true scale of AWS, you need to look at the numbers.
- AWS has over 1 million active users in 190 countries
- AWS has 5x more deployed cloud infrastructure as their next 14 competitors combined
- Each day, AWS adds as much infrastructure as they used to run in total 7 years back
- Amazon S3 is designed to deliver 99.999999999% durability and scale past trillions of objects worldwide
- AWS partner, Netflix, accounts for up to one-third of Internet traffic during peak usage times
- AWS accounts for 41.5% of the public cloud market, bigger than Microsoft, Google, Rackspace, and IBM combined
Through incredible economies of scale, AWS has decreased its prices at least as many as 60 times since its launch – and despite this, AWS generated a whopping $26 billion in revenue for parent Amazon in 2018.
The Fight for Smart Speaker Market Share
Tech brands are betting that the future of personal computing will be driven by the sound of your voice, and the fight for smart speaker market share is heating up.
Tech companies are betting that the future of personal computing will be driven by the sound of your voice.
If they’re right, this early stage of smart speaker adoption will have a massive impact on future profits. Switching smartphone brands is relatively straightforward, but switching an entire voice assistant ecosystem? That’s not quite as easy.
Voice Assistants like Siri and Alexa will transform behavior inside the home. At the center of that behavior is a smart speaker, serving as the hub of a connected lifestyle.
– Andy Chambers, Vice President of Connected Home, Assurant
Today’s infographic is an overview of the rapidly expanding smart speaker market, and how the major players in the space are competing for critical early market share.
Moving towards Majority
Adoption of smart speakers really began to gain traction with consumers in 2018, when the percentage of American adults with such a device passed the 20% mark. Today, the U.S. adoption rate sits at about 25%, and by 2022, it’s expected to more than double to 55%.
In just one year, China’s global share of the smart speaker market went from almost zero to 30%, and the country’s smart home market was valued at over $7 billion. Companies like Baidu and Alibaba are fighting their own battle for domestic market share.
Amazon’s Head Start
It has now been almost five years since Amazon announced Alexa and the Echo to the world, kicking off the age of the smart speaker.
The sting of Amazon’s failed foray into the smartphone market was still fresh, and the initial reaction to a device listening inside the home was mixed. That said, Amazon’s huge built-in customer base and two-year head start was enough to bag a hefty portion of the smart speaker market. Now, other brands are playing catch-up.
Here’s a look at U.S. smart speaker market share by device:
|Company||Device||Voice Assistant||Market Share|
|Amazon||Echo or Plus||Alexa||23.2%|
|Home Mini||Google Assistant||11.2%|
|Home Hub||Google Assistant||1.2%|
|Home Max||Google Assistant||0.2%|
The Fight is Heating Up
Companies are responding to Amazon’s market dominance in different ways.
Apple recently dropped the price of its HomePod smart speaker to $299, a rare price cut for a company that is used to people lining up to buy its products. Unlike its competitors, Apple can’t go all-in on using the device as a “loss leader” to support advertising or e-commerce. HomePod is positioned as a more premium product, but price will be a sticking point for many.
Google, on the other hand, is taking a drastically different approach. The company released the Google Home Mini as a cost effective entry point for consumers looking to try out a voice-directed device.
As well, Google partnered with Spotify to offer Home Minis as a free promotion for Spotify Premium customers. Spotify’s premium userbase is nearly 90 million, so if even a fraction of users take the free offer, a massive influx of Google smart speakers will enter the market.
Over the last year, Amazon saw over 10% of its market share chipped away by competitors, and Google accounted for about half of that loss.
What’s Next? It’s Hard to Say
With the promise of future connected home profits on the line, it’s hard to say what lengths companies will go to outmanoeuver each other. One thing is clear though, the overall smart speaker market is still in the midst of a major growth cycle, and we’re just seeing the beginning of what’s possible with voice-directed devices.
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