When the pandemic broke out in New York City, it spurred a huge wave of online shopping that didn’t decline, even in a metropolis where the stores were rarely far away. People who regularly shop online are now buying more, while those who start ordering to avoid exposure to the virus have gained an upper hand.
The abrupt change in shopping patterns has made New York a challenging stakes place for urban deliveries, with densities both a draw and a nightmare about logistics.
It also highlights the need for a non-flashy but vital part of the e-commerce infrastructure: warehouse space for storing and sorting packages and meeting customer expectations for deliveries. faster and faster.
Amazon has gone through the pandemic to embark on inventory shopping in New York, dramatically expanding its footprint in the largest and most lucrative market in the country.
It has acquired at least nine new warehouses in the city, including a massive one million square foot warehouse that sprouted up in Queens that would be the largest in New York and today has at least 12 in five. District. And it has added to its list more than two dozen warehouses in the surrounding suburbs.
No other major competitor has a single warehouse in the city, and Amazon has largely left most of its main competitors, like Wal-Mart and Target, behind.
Adam Gordon, whose real estate company Wildflower owns several warehouses in the city, said: “Amazon has people doing the deal. “And they competed.”
While New York’s narrow streets, chronic congestion, and brutal parking shortages all pose formidable challenges, the city also has a severe shortage of warehouses only when they are most needed to equipped with an efficient delivery system.
New York has about 128 million square feet of industrial space, much less much smaller cities. Indianapolis, home to only one-tenth the population of New York, is nearly twice the area. Chicago ranks first in the nation with more than 1.2 billion square feet.
Many packages arrive in New York from New Jersey and Pennsylvania, where there is enough room to build larger and cheaper warehouses. And over the past year Amazon added 14 new warehouses in New Jersey and on Long Island, totaling more than 7 million square feet.
But having warehouses in the city would be more cost-effective and could cut delivery costs by about 20 percent compared to delivering in New Jersey.
Deborah Bass, an Amazon spokesperson, said: “We are excited to continue investing in New York state by adding new delivery stations. , needs and spirit of the community. “
Amazon’s rapid expansion in New York has also brought more scrutiny of its workers, a problem the company faces in other parts of the country. Amazon has sought to quell warehouse workers’ efforts to form unions – including on Staten Island – and a climactic battle is currently waged in Alabama.
In New York, the attorney general has sued Amazon over the conditions at two of its local warehouses, accusing the company of not properly cleaning its buildings and conducting adequate communications tracking, as well as undertaking “prompt retaliation” to silence employee complaints.
An Amazon spokesperson denied the allegations and said the company cares “deeply about the health and safety” of its workers.
Amazon’s growth in New York comes two years after they abandoned their plans to build a sparkling new headquarters in Queens. A group of progressive lawmakers and activists has opposed granting one of the richest companies in the world billions of dollars in government incentives that the giant retailer won by inducing Cities compete with each other.
But New York remains a lucrative award, and Amazon’s warehouse chain in the city is firmly positioned to benefit from the pandemic-induced spike in online shopping.
About 2.4 million packages are shipped in the city every day, nearly half a million more than before the pandemic, and city data shows 80 percent of deliveries are for residential customers, compared with 40. % before outbreak.
According to an analysis by José Holguín-Veras and Cara Wang, e-commerce flow surpassed all categories: daily grocery delivery more than doubled, restaurant delivery and processed food up 12 % and 24% increase in home delivery. , professor at Rensselaer Polytechnic Institute, who works on transportation problems.
“The challenge is now urban delivery,” said Holguin-Veras. “And if you look at the numbers, they just add up.”
While there may be some drop in orders as the flare subsides, the overall trajectory is clear, experts said.
“The pandemic has accelerated the adoption of e-commerce,” said Marc Palazzolo, transportation consultant at Kearny, a consulting firm that has advised the city’s business leaders on e-commerce. 5 years in a year because users have to adapt. .
By 2045, the total volume of cargo moving through New York City is expected to reach 540 million tonnes per year, up from 365 million tonnes today, according to city data.
However, the online shopping boom will only exacerbate problems such as congestion and pollution that had worsened prior to the pandemic, leaving masses of delivery trucks flooding the city and flooding the pavement. and corridors with packages.
It has come in a perilous period for New York’s small businesses, which has been battered by a pandemic with nearly 3,000 people closed as of August of last year, according to the most recent data available from City control office.
Small businesses that struggle to compete online with retailers often charge lower fees for the same item and have a much stronger delivery infrastructure.
“Building e-commerce capabilities isn’t easy,” said Jonathan Bowles, chief executive of the Center for an Urban Future, a research organization. “It requires more than just having a website. ”
For larger retailers, having warehouses closer to consumers will become even more important in an increasingly competitive online marketplace.
But the city, once a manufacturing hub filled with factories, was not particularly welcome. In an attempt to protect residential areas from pollution and traffic, zoning rules limit the construction of warehouses in designated production areas.
“There’s not much space left to build new warehouses, so it keeps most retailers from growing,” said Gabriel Cepeda, founder of Pickups Technologies, a logistics and storage company.
Construction is underway or about to begin on new plants around 8.7 million square feet, including the 1.2 million square foot UPS site in Red Hook, Brooklyn.
The three warehouses under construction will have multiple floors, which is common in Asia, and multiple berths can be used by one company or divided among companies. Amazon has signed a lease at two of them.
Opening warehouses has brought a number of economic benefits, leading to hiring thousands of workers – some part-time jobs starting at $ 17.25 an hour – at a time when many people were the city has no jobs.
Mr. Cepeda is creating a homegrown distribution system of “small sheds”. He has recruited more than 1,000 residents in Manhattan and Brooklyn who will be paid to use their apartments to store goods for retailers and ship them for delivery.
Amazon, the company that owns Whole Foods, also uses groceries to fill orders online, with its workers typically outnumbering the store’s customers.
Walmart has a warehouse in the Bronx through Jet.com, a now defunct shopping site it owns, but has since been vacated, is now leased by Amazon. Wal-Mart – there are no stores in the city – uses Pennsylvania warehouses to serve customers online.
Target, which began day-to-day delivery in the city in 2017 and has around two dozen stores in New York, has used its stores as small distribution centers, in part because of online ordering. at the store cheaper than the suburban warehouse.
Many smaller companies are feeling pressure to expand their online and shipping operations.
Stop & Shop has hired hundreds of workers to enhance its online grocery service in the New York area, including at a nearby Jersey City warehouse.
Pat LaFrieda Meat Purveyors, butcher for many upscale restaurants, spent more than $ 1 million on online and retail sales, selling to shoppers on its website and through Amazon Fresh and ShopRite. That business will account for 90% of the company’s revenue by 2020, up from 15% before the pandemic.
“Home delivery will be the highlight in the next decade,” said LaFrieda. “It will be the key to our success.”
The company reconfigured its New Jersey warehouse to prioritize retail and design new packaging for online customers.
While Amazon is laying the foundations for online dominance in New York, Gordon, owner of several warehouses, said other retailers also need to be more agile to respond to new ways. that people are buying. The demand for e-commerce also puts additional pressure on warehouse staff and drivers to complete and deliver orders on time as expected by customers.
“Timely delivery and last mile delivery are what it means,” said Gordon. “You need to be very close to your customers to deliver the level of service people are expecting now.”