Amazon Seeks Greater Fulfillment by Adding Distribution Centers

Amazon is expanding its warehouse capacity at an insanely aggressive pace, having already announced five new distribution centers so far this year, including two since yesterday.

The five new facilities will add about four million square feet of space and hire thousands of new employees.

But that’s just the beginning. The company has plans to expand even more as it adds more merchandise to its inventory and tries to speed shipping to meet the popularity of services like Amazon Prime.

In all, the Seattle-based e-commerce giant plans to add at least nine fulfillment centers this year, of which roughly half will be located in North America. If the company’s growth rates continue, it may end up building even more, execs disclosed during its last earnings call.

It is the second year in a row that Amazon has built out more capacity, having added 13 fulfillment centers in 2010. The company currently has fulfillment centers in Arizona, Delaware, Indiana, Kansas, Kentucky, Nevada, Pennsylvania, Texas and Virginia.

Today, it announced it will build a fourth distribution center in Phoenix, spanning 1.2 million square feet, making a total of 4 million square feet in the state. For perspective, that’s the equivalent of nearly 70 football fields.

Yesterday, it said it was adding 900,000 square feet in Indiana.

Amazon hires thousands of full-time positions at these facilities, including roles in picking, packing and receiving, and shipping.

Amazon did not specify how many employees would be necessary at each location, but said for example that it was seeking 2,000 workers in Lexington County, S.C., and 2,700 in Hamilton County, Tenn. (not including 4,000 seasonal workers).

The company’s impressive growth was put into context earlier this year by Geekwire, which reported that Amazon had hired 4,200 employees in the first quarter to bring its total to 37,900.

While Amazon must build these facilities to keep up with demand, the investments are costing it significantly. In the first quarter, Amazon’s revenues jumped 38 percent, but net income fell by 33 percent compared to the year-ago period.

Still, it’s a price that must be paid. You can’t store everything in the cloud.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik