Amazon Expands in N.Y.C. as Pandemic Sends Customers On-line

Amazon Expands in N.Y.C. as Pandemic Sends Shoppers Online

As the pandemic hit New York City, it sparked a huge surge in online shopping that has not abated even in a metropolis where stores are rarely far away. People who have bought online regularly are now buying more, while those who started ordering to avoid exposure to the virus believe the benefits.

The abrupt shift in shopping patterns has turned New York into a testing ground for urban deliveries, the density of which is both a draw and a logistical nightmare.

It also highlighted the need for a nondescript but critical piece of e-commerce infrastructure: warehouse space to store and sort packages and meet customer expectations for ever faster delivery.

Amazon spent the pandemic shopping in New York, significantly expanding its presence in the country's largest and most lucrative market.

It has snapped up at least nine new warehouses in the city, including a 1,000-plus-square-foot behemoth that is rising in Queens and will be the largest in New York. Today it has at least 12 warehouses in the five boroughs. And it has added more than two dozen warehouses in suburbs around the city to its list.

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

"Amazon had people doing business," said Adam Gordon, whose Wildflower real estate company owns several warehouses in town. "And they were in competition."

While New York's narrow streets, chronic traffic jams, and the brutal lack of parking pose daunting challenges, the city also has a serious shortage of warehouses when they are most needed to properly lubricate an efficient delivery system.

New York has roughly 128 million square feet of industrial space, far less than many smaller cities. Indianapolis, whose population is only one-tenth that of New York, has almost twice as much space. Chicago leads the nation at more than 1.2 billion square feet.

Many packages come to New York from New Jersey and Pennsylvania, where there is room for larger and cheaper warehouses. And last year, Amazon added 14 new warehouses in New Jersey and Long Island that total over 7 million square feet.

However, warehouses in the city are more cost-effective and can reduce shipping costs by about 20 percent compared to shipments originating in New Jersey.

"We're excited to continue investing in New York State by adding new delivery stations," said Deborah Bass, an Amazon spokeswoman, adding that the company's goal was "to be part of the people by embracing them." To become structure of New York City. " , the needs and spirit of the community. "

Amazon's rapid expansion in New York has also scrutinized the treatment of its workers, an issue the company has faced in other parts of the country. Amazon has tried to suppress efforts by warehouse workers to form unions – including on Staten Island – and a high-profile battle is currently waged in Alabama.

In New York, the Attorney General has sued Amazon over conditions at two of its local warehouses, accusing the company of improperly cleaning its buildings, improper contact tracing and "quick retaliation" to silence complaints from employees .

An Amazon spokeswoman denied the allegations, saying the company was "very concerned about the health and safety" of its employees.

Amazon's growth in New York comes two years after plans to build a shiny new headquarters in Queens were abandoned. A chorus of lawmakers and progressive activists had refused to give one of the richest companies in the world billions in government incentives that the giant retailer won by pitting cities against each other.

But New York remains a tempting price, and Amazon's numerous warehouses around the city place it in a strong position to capitalize on the huge surge in online shopping that the pandemic sparked.

Around 2.4 million parcels are delivered in the city every day, almost half a million more than before the pandemic. City data shows that 80 percent of shipments are made to residential customers, compared with 40 percent prior to the outbreak.

The flow of e-commerce spans all categories: daily grocery deliveries have more than doubled, restaurant and convenience food deliveries have increased by 12 percent, and household goods deliveries are down, according to an analysis by José Holguín-Veras and Cara Wang up 24 percent, professors at Rensselaer Polytechnic Institute who work on transportation issues.

"The challenge now is urban deliveries," said Holguín-Veras. "And if you look at the numbers, they'll only increase."

While orders are likely to decline as the outbreak wears off, the general trend is clear, experts say.

"The pandemic has accelerated e-commerce adoption by five years in one year as users have been forced to adapt," said Marc Palazzolo, transportation advisor at Kearny, a consultancy that advises city business leaders on e-commerce Has .

By 2045, the total volume of cargo transported through New York City is projected to reach 540 million tons per year, up from 365 million tons today, according to the city.

Still, the online shopping boom will only exacerbate issues like traffic jams and pollution, which were bad before the pandemic, sending flotillas of delivery vans around town, and flooding sidewalks and lobbies with packages.

It's a dangerous time for New York City's small businesses, which have been hit by the pandemic and have closed nearly 3,000 since August last year, according to the latest data available from the city administrator's office.

Small businesses struggle to compete online with retailers who typically charge less for the same items and have a far more robust delivery infrastructure.

"Building e-commerce capabilities is not easy," said Jonathan Bowles, executive director of the Center for an Urban Future, a research organization. "It takes a lot more than just a website."

In an increasingly competitive online marketplace, it is becoming increasingly important for larger retailers to have warehouses closer to the consumer.

But the city, once a manufacturing center full of factories, isn't particularly welcoming. In order to protect residential areas from pollution and traffic, the zoning rules limit the construction of warehouses to certain production areas.

"There is no more space to build new warehouses, so most retailers are locked out of growth," said Gabriel Cepeda, founder of Pickups Technologies, a warehouse and logistics company.

Construction is ongoing or about to begin for new factories totaling approximately 8.7 million square feet, including a 1.2 million square foot UPS facility 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 one company or shared among several. Amazon has signed leases with two of them.

The opening of warehouses has brought some economic benefits and resulted in the hiring of thousands of workers – some part-time jobs start at $ 17.25 an hour – at a time when many city dwellers are unemployed.

Mr. Cepeda creates a domestic distribution system for "mini-warehouses". He has recruited more than 1,000 Manhattan and Brooklyn residents who are paid to use their homes to store goods for retailers and ship them for delivery.

Amazon, which owns Whole Foods, has also used the grocery stores to fulfill online orders, with its employees often having more customers than stores.

Walmart had a warehouse in the Bronx through, a now defunct shopping site that it owned, but later vacated the property, which is now rented from Amazon. Wal-Mart – which has no stores in town – uses Pennsylvania warehouses to serve online customers.

Target, which started same-day delivery in the city in 2017 and has two dozen stores in New York, has used its stores as mini distribution centers, also because it's cheaper to place an order online in a store than in a warehouse out of town.

Many smaller businesses are under pressure to expand their online and delivery businesses.

Stop & Shop has hired hundreds of people to improve online grocery service in the New York area, including a warehouse in nearby Jersey City.

Pat LaFrieda Meat Purveyors, the butcher of many high-end restaurants, has spent more than $ 1 million on online and retail sales and sold to buyers on his website, as well as through Amazon Fresh and ShopRite. This business accounted for up to 90 percent of the company's sales in 2020, down from 15 percent before the pandemic.

"Home delivery will play a prominent role for the next decade," said LaFrieda. "It 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 groundwork for online dominance in New York, Gordon, who owns multiple warehouses, said other retailers also need to become more agile to respond to the new buying methods. The e-commerce requirements put additional pressure on warehouse workers and drivers to fulfill orders on time and deliver, as customers are now expecting.

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


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