How Amazon is Trying to Cut Down Warehouse Costs

Being the biggest online retailer in the world, knows quite a bit about warehouse storage.

After all, those millions of products need to be stored somewhere.  It’s safe to say that Amazon has just about every type of warehouse equipment there is, from basic yard ramps to automated sorting systems.

So when Amazon makes a change regarding their warehouse setup, the world listens.

Fighting Costs to Offer Lower Prices

If your business doesn’t have an actual storefront (or if your warehouse is the store), some of your biggest expenses are storage and loading costs.  This is true for Amazon as well.  By finding ways to lower their warehouse expenses, they can pass those savings off to customers, thereby selling high volumes.

One way they hope to do this is by cutting out their warehouses altogether and ship directly from the manufacturers.  This could allow them to break into markets they might not otherwise be able to.

Markets like toiletries.

Moving in with Procter & Gamble

When a person needs toiletry items, they usually need them fast, and they probably don’t want to spend a lot on them.  Amazon has been attempting to break into the area for a while.

But just recently, they really stepped up their game.

Currently, Amazon operates out of at least 7 Procter & Gamble warehouses around the world.  Procter & Gamble (or P & G) is, of course, one of the largest manufacturers of personal care items in the world.  Amazon hopes to use this to their advantage.

The process is simple.  A customer purchases an item on  Amazon then sends their delivery people to the closest P & G warehouse to pick the item up.  The item gets delivered.

Delivery cost and time should be smaller and storage cost is drastically reduced.  But is it enough?

Who Buys Toiletries Online?

Some say that there simply isn’t enough margin on items such as paper towels and diapers for Amazon to go through all of this effort.  Not to mention the fact that the large majority of people simply don’t buy these types of items online.

Still, online sales continue to rise.

Amazon may be betting against current trends, but that’s how the online market place started in the first place.  Think of a company like (who just happens to be owned by Amazon).

Fifteen years ago, the idea of buying shoes online would have seemed crazy.  After all, who buys shoes without trying them on?  Today, Zappos makes over $1 Billion in revenue.

Is this combination of shared storage and borderline-drop shipping a wave of the future?  Maybe.

All we know is, regardless of how stores sell their items, they have to be stored somewhere.  And we’ll be here to supply those warehouses with the best equipment available.

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