Their research involves pouring over demographic data and housing income, and using artificial intelligence and machine learning to make their predictions. They use demand forecasting, which means they figure out how many of various items customers want.Ĭompanies employ scores of data scientists to do such forecasting - not just across the U.S, but in different states and metropolitan areas, according to Dai. How does a retailer like Amazon know that? With centralization 'you can manage the uncertainty and fluctuation in demand,' Dai continues, 'but you have to deal with delivery time, right? Because it takes a long time to ship something from the West Coast to the East Coast.' So over time, he says, Amazon figured out the trade-off between centralization and proximity and began building more fulfillment centers closer to its customers.īut even if it has a ton of regional fulfillment centers, an e-commerce retailer still has to have them already filled with the stuff that people order. Having a centralized system enables an e-commerce retailer to get products to customers quickly, because it can maintain a big supply of products, which means that compared to a physical store, it's likely to have the stuff you want, and can ship it right away. Compared to a business like Walmart that relies upon physical stores, Amazon is better able to deal with uncertainty and fluctuations in demand.īut instead of having to wait for the bookstore to order a copy of 'War and Peace,' or worse yet, settle for a James Patterson novel that's in stock, an e-commerce consumer can just go ahead and order the Tolstoy novel that he or she wants. Having these big, centralized warehouses is a huge advantage, because it enables Amazon to stock enough products to meet the needs of a variety of different customers quickly. So today, a single fulfillment center fills the needs of an entire region, which could be a state or two states. Instead, Dai says, Amazon began with just one single fulfillment center in the Seattle area to maintain its supply of merchandise and gradually expanded. Amazon, in contrast, until recently didn't have any physical stores at all, and now has just a few. A big-box retailer like Walmart might have hundreds of stores, and a warehouse for every store or two or three stores. Here's why the fulfillment centers matter.

But, an unaffiliated website that provides tools and data to Amazon sellers, estimated in 2021 that the e-commerce giant had 185 of them across the world, including more than 100 in the U.S. From there, goods are loaded into delivery vehicles for their ride to your doorstep.Īmazon doesn't disclose the number of fulfillment centers on its website, and the company didn't respond to an email request for information.Packages are then loaded onto trucks to be taken to yet another facility, called a delivery station.Once the planes land, the packages are transferred to a facility called a sort center, where they're organized by ZIP code.

Those packages are loaded onto large trailer trucks, and transported to an Amazon air site, where they're loaded onto aircraft.The order is transmitted to one of the company's fulfillment centers - these are basically, massive warehouses where employees pick and pack the products into boxes.

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