If you have been following the Amazon story of late then you have probably heard about the recent buildup of the company's new distribution center network of sortation centers. It has been happening quickly, and as always it has been shrouded in a veil of secrecy.
The so-called Amazon experts out there have been predicting a rollout of 40-plus food distribution facilities nationwide by the end of 2014-2015 but they were completely off the mark. Pardon the pun but there are more important fish to fry right now.
To understand Amazon's distribution network strategy, it is important to understand its supply chain weaknesses which are two-fold:
1. Amazon today is primarily an online B2C retailer and as such it has a significant need to build up human resources for the final 2-2.5 months of the year. In the United States we estimate that Amazon's hiring of temporary associates for peak season in 2013 was about 104,000 people. In the same year, Target added only 50,000 people despite the fact the two firms were similar in top-line revenue. This illustrates how much more pressure to add human resources is placed on the pure online retailer as compared to the traditional retailer, and indeed this is a fragility.