Amazon gets ready to roll out new DCs in six states

A few months ago, DC Velocity reported that Amazon had set up a recruiting booth at the Warehousing Education and Research Council's annual conference. At that time, Philip Dana, the company's talent acquisition manager, told the magazine he was looking to hire 5,000 warehousing professionals.

He may have to up that number considerably. According to a recent report in the online magazine Slate, the retail giant has committed to building or leasing new DCs in at least six states, including New Jersey, Virginia, Tennessee, Indiana, Texas, and California. The company is expected to hire 10,000 new workers in California alone over the next four years. Amazon already has 34 warehouses and DCs in North America.

A number of states have passed laws that imposed sales taxes on Amazon's business, and the company had fiercely resisted those mandates. But according to Slate and a series of reports in the Financial Times, Amazon has done an about-face and has signed agreements to collect sales taxes in some of those states. Why? By agreeing to collect sales taxes, Amazon can legally open warehouses and DCs in some of the nation's most heavily populated areas, says Slate's Farhad Manjoo.

The connection between sales taxes and warehouses becomes clearer when you consider that Amazon reportedly asked New Jersey officials for a 22-month extension on its sales tax exemption—just long enough, perhaps, to construct the two 1-million-square-foot DCs the company plans to build in the Garden State. Construction is contingent on Amazon's receiving tax incentives under a separate deal, according to a report in the New York Times.

So why is Amazon so eager to build so many DCs in states where it previously did not want a physical presence? By all accounts, Amazon's explosive expansion will support its plan to make overnight delivery standard and offer same-day delivery for an additional fee. Amazon can only achieve that level of service by locating more warehouses closer to large population centers and by making its warehouses hyper-efficient. (Cue the Kiva robots ...)

Manjoo reports that the retailer is already close to achieving the next-day delivery standard.

To read more about Amazon's warehousing and delivery plans, and what they could mean for traditional retailers, click here.