Amazon grows in New York as pandemic sends shoppers online

When the pandemic gripped New York City, it propelled a huge surge in online shopping that hasn’t abated, even in a metropolis where stores are rarely far away. People who used to shop online regularly are now buying more, while those who started ordering to avoid exposure to the virus have been won over by the benefits.

The abrupt shift in buying habits has made New York City a high-stakes proving ground for urban deliveries, with its density both a draw and a logistical nightmare.

He also highlighted the need for an unglamorous but essential piece of e-commerce infrastructure: warehouse space to store and sort packages and meet customer expectations for faster and faster delivery.

Amazon spent the pandemic embarking on a shopping spree in New York City, dramatically expanding its footprint in the nation’s largest and most lucrative market.

It has seized at least nine new warehouses in the city, including a giant over a million square feet rising in Queens which will be its largest in New York, and today has at least 12 warehouses in the five districts. And he added to his list more than two dozen warehouses in the suburbs surrounding the city.

No other major competitor has a single warehouse in the city, and Amazon has largely left behind most of its major competitors, like Wal-Mart and Target.

“Amazon had people doing business,” said Adam Gordon, whose real estate company Wildflower has several warehouses in the city. “And they were upgraded.”

While New York’s narrow streets, chronic traffic jams, and the abrupt lack of parking are all daunting challenges, the city also suffers from a severe shortage of warehouses when they are most needed to properly grease a storage system. efficient delivery.

New York has about 128 million square feet of industrial space, far less than many small cities. Indianapolis, which has only a tenth of New York’s population, has nearly double the space. Chicago is the nation’s leader with over 1.2 billion square feet.

Many packages arrive in New York from New Jersey and Pennsylvania, where it is possible to build larger and cheaper warehouses. And over the past year, Amazon has added 14 new warehouses in New Jersey and Long Island, totaling over 7 million square feet.

But having warehouses in town is more profitable and can cut about 20 percent excluding delivery charges compared to deliveries originating in New Jersey.

“We are delighted to continue to invest in New York State by adding new delivery stations,” said Deborah Bass, an Amazon spokesperson, adding that the company’s goal was to “do part of the fabric of New York by embracing the people. , the needs and the spirit of the community.

Amazon’s rapid expansion in New York City has also drawn closer scrutiny in the treatment of its workers, an issue the company has faced in other parts of the country. Amazon has sought to quash efforts by warehouse workers to form unions – including on Staten Island – and a high-profile battle is now being waged in Alabama.

In New York, the the attorney general sued Amazon on conditions at two of its local warehouses, accusing the company of failing to properly clean its buildings and conducting adequate contact tracing, as well as taking “swift retaliation” to silence employee complaints.

An Amazon spokeswoman disputed the allegations and said the company cares “deeply for the health and safety” of its workers.

Amazon’s growth in New York is coming two years after scrapping plans to build a sparkling new headquarters in Queens. A chorus of lawmakers and progressive activists had opposed giving one of the richest companies in the world billions of dollars in government incentives that the retail giant won by making cities compete .

But New York remains an attractive price, and Amazon’s warehouse chain in the city puts it in a strong position to profit from the huge surge in online shopping caused by the pandemic.

About 2.4 million packages are delivered to the city every day, nearly half a million more than before the pandemic, and city data shows 80% of deliveries are to residential customers, up from 40 % before the epidemic.

The e-commerce torrent crosses all categories: Daily grocery deliveries more than doubled, restaurant and ready-meal deliveries rose 12%, and housewares deliveries jumped 24%, according to analysis by José Holguín-Veras and Cara Wang, professors at the Rensselaer Polytechnic Institute who work on transport issues.

“The challenge now is urban deliveries,” said Mr. Holguín-Veras. “And if you look at the numbers, they will only increase.”

While there is likely to be a drop in orders as the outbreak abates, the overall trajectory is clear, experts say.

“The pandemic has accelerated e-commerce adoption by five years in one year because users have been forced to adapt,” said Marc Palazzolo, transport consultant for Kearny, a consulting firm that advised chefs city ​​business on e-commerce. .

By 2045, the total volume of freight passing through New York is expected to reach 540 million tonnes per year, up from 365 million tonnes today, according to city data.

Yet the boom in online shopping will only worsen issues such as congestion and pollution that were already severe before the pandemic, sending flotillas of delivery trucks across town and flooding sidewalks and parcel halls.

It came during a perilous time for small businesses in New York, which have been battered by the pandemic, with nearly 3,000 shutting down permanently last August, according to the most recent data available from the city’s comptroller’s office. .

Small businesses find it difficult to compete online with retailers who typically charge less for the same items and have a much more robust delivery infrastructure.

“Developing e-commerce capabilities is not easy,” said Jonathan Bowles, executive director of the Center for an Urban Future, a research organization. “It requires more than just a website. ”

For large retailers, having warehouses closer to consumers will become more crucial in an increasingly competitive online marketplace.

But the city, once a manufacturing center full of factories, is not particularly welcoming. In an attempt to protect residential neighborhoods from pollution and traffic, zoning rules limit the construction of warehouses to designated manufacturing districts.

“There is no more space to build new warehouses, so most retailers are excluded from the growth,” said Gabriel Cepeda, the founder of Microphone technologies, storage and logistics company.

Construction is underway or about to begin on new factories that will total approximately 8.7 million square feet, including a 1.2 million square foot UPS site in Red Hook, Brooklyn.

Three warehouses under construction will have multiple levels, which is common in Asia, and multiple loading docks that can be used by a business or distributed among several. Amazon signed leases in two of them.

Opening warehouses has brought economic benefits, leading to the hiring of thousands of workers – some part-time jobs start at $ 17.25 an hour – at a time when many of the city’s residents are unemployed .

Mr. Cepeda is in the process of creating a local distribution system of “mini-warehouses”. He has recruited over 1,000 Manhattan and Brooklyn residents who will be paid to use their apartments to store goods for retailers and send them out for delivery.

Amazon, which owns Whole Foods, has also used grocery stores to fulfill online orders, with its employees often outnumbering store customers.

Walmart had a warehouse in the Bronx via, a now-defunct shopping site he owned, but then moved out of the property, which is now leased by Amazon. Wal-Mart – which has no stores in town – uses warehouses in Pennsylvania to serve customers online.

Target, which began same-day delivery to the city in 2017 and has about two dozen stores in New York City, has used its stores as mini-fulfillment centers, in part because it’s cheaper to process an order. online in a store than in an out-of-town warehouse.

Many small businesses are feeling the pressure to expand their online and delivery operations.

Stop & Shop has hired hundreds of workers to expand its online grocery service in the New York City area, including at a warehouse near Jersey City.

Pat LaFrieda Meat Purveyors, the butcher of many high-end restaurants, has spent over $ 1 million on his online and retail operations, selling to shoppers on his website and through Amazon Fresh and ShopRite. This activity represented up to 90% of the company’s sales in 2020, up from 15% before the pandemic.

“Home delivery will be important over the next decade,” said LaFrieda. “This will be the key to our success.”

The company reconfigured its New Jersey warehouse to prioritize retail sales and designed new packaging for online customers.

As Amazon lays the foundation for online dominance in New York City, Mr. Gordon, owner of multiple warehouses, said other retailers should also become more nimble in responding to new ways people shop. The demands of e-commerce are also putting additional pressure on warehouse workers and drivers to fill and deliver orders on time, as customers now expect.

“Just-in-time delivery and last mile delivery is what it means,” Gordon said. “You have to be very close to your customer to provide the level of service that people expect now.”

Amazon grows in New York as pandemic sends shoppers online

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