Amazon (NASDAQ: AMZN) has already established what many consider to be the gold standard for digital order fulfillment. The online giant has turned shipping into an art form by continuously expanding its network of couriers and drivers, all the while investing in technology to make its warehouses run more efficiently.
But Amazon's work isn't done. Though Amazon does a great job of fulfilling two-day orders, it's looking to improve its one-day shipping. Not only that, but to compete with retail giants like Walmart and Target, it will need to make same-day deliveries available in more markets. To that end, it's making big plans to grow its capabilities in the near term.
Adding 100 more industrial facilities
Amazon has set a lofty goal of opening 100 additional U.S. facilities in September ahead of the holiday season, according to The Wall Street Journal. It also plans to hire 125,000 workers for its warehouses and fulfillment centers.
The move is a strategic one on Amazon's part. Last year, many retailers -- and their customers -- grappled with shipping delays as courier services became overwhelmed during the holiday boom. By opening more facilities, Amazon can achieve the essential goal of bringing its products closer to customers from the get-go. That way, when the holiday rush kicks into gear, it'll be well-positioned to crank out orders quickly, thereby continuing to one-up its competition.
Of course, Amazon's plans to expand its network of distribution centers will only go so far if it can't hire. The warehouse sector on a whole has struggled with labor shortages this year, but Amazon hopes its competitive wages and benefits will be a draw for potential hires. Amazon's minimum wages have risen to $18 and change, on average, on a national level, and they're as high as $22.50 in some markets.
All told, Amazon employs over 950,000 people across the country and operates more than 930 facilities, according to MWPVL International. The online giant has already opened 250 new facilities this year, so its goal of adding 100 more may be more than attainable.
The real estate investor takeaway
Amazon's warehouse and distribution center plans speak to a much larger trend in the real estate investing world: In the near term, demand for industrial space is only going to grow. Amazon isn't the only retailer that's seen a surge in online orders, and now that so many customers are used to making purchases online, investors should expect them to uphold that habit even once the pandemic comes to an end or reaches a more manageable threshold. As such, now's a great time to load up on industrial REITs, or real estate investment trusts.
On top of expanding its warehouses and fulfillment centers, Amazon recently opened a major air hub in Cincinnati that features robotic technology designed to sort and move packages more efficiently. Once Amazon adds its 100 new facilities to its already-massive network, it will be well-poised to smoke out the competition on delivery times, thereby solidifying its position as the ultimate shipping powerhouse.