Randall Park Mall was considered in the 1970s as a temple to American consumerism, a shopping center that even got the title “the biggest shopping mall in the world.” A shopping mall that has since been acquired by Amazon, this after having closed its doors in 2009, before the unstoppable rise of online commerce.
Yes, while Amazon is growing impressively, some retail stores, are going through their worst time of low sales. Why? Easy, the user no longer goes shopping the way they did – the vast majority of people buy online not only because of the aggressive pricing strategies, but also because of 2 day shipments and warranties.
Amazon already has 105 wineries and 35 in planning
Amazon’s figures are brutal. During their last quarterly report, they showed 25% growth over the previous year, but the most important thing here is that their Distribution Centers (Fulfillment by Amazon or FBA) showed a 40% increase over the previous year, which means that Amazon needs more physical spaces to store everything it sells. In short: Amazon is selling more.
The FBA program is one of the most important ones in Amazon by offering an option to sellers to store their products, and thus enabling them be part of the Prime delivery program in just a few days or even hours. Income from this program increased by 38% year over year, or nearly $7 billion more.
This is a win-win for Amazon and its sellers, as more users sign up for Prime, more vendors point to FBA in the face of increased sales and the need to have a competitive advantage, as Amazon has shown that a Prime user buys more than a non-subscribed user, and the products under these benefits appear first in searches.
Faced with this increase in sales and demand for FBA, Amazon has now 105 Distribution Centers and 35 in planning. But what’s more is that 25 of the 35 are commercial centers were abandoned or closed due to low sales.
Breaking down the empire offline
Amazon’s latest project is to transform the old, abandoned Randall Park Mall, into its new delivery center, which will be one of the company’s largest in the United States. The area is located in a prime area in North Randall, Ohio, which places it outside of Cleveland and a few miles from Pittsburgh, Detroit and Columbus. Which means access to more than three million new customers to offer them Prime membership.
The land of this old mall is 280,000 square meters including the parking area, making it ideal for Amazon plans. However, the company estimates that it will take at least three years for the facilities to be complete and in full operation.
This project will cost Amazon just over $177 million, and it will operate its now famous robots that are currently present in only 25 distribution centers, estimating that the company has more than 80,000 of these robots deployed.
Right now, Amazon is trying to be more efficient in delivering and implementing these delivery centers, as the company says they are not being built fast enough to catch up with the growth in demand. But let’s face it, compared to the last quarter of US shopping center closures, which are number over 400, Amazon is in a prime position.