Amazon grounded? Retail giant focuses on ground efficiency for now

It’s been roughly a decade since Amazon’s Jeff Bezos announced plans to begin working toward delivery of its orders via unmanned aerial drones, and now, after doubling down on its ground delivery network, it appears the e-commerce giant's focus has shifted.

Amazon’s enhanced delivery network has experienced rapid growth over the last couple years, with the company doubling its warehouse capacity to more than 1,000 facilities, according to a recent feature in the Wall Street Journal. 

An email from an Amazon representative to Winsight Grocery Business confirmed that it has worked to improve its ground delivery efforts. A spokesperson could not immediately be reached to provide further details.

“Coming out of the pandemic, Amazon was in a better position to take stock of their operation's footprint and the expansion they had undertaken,” the email said. “This also gave the company the opportunity to grow efficiency in an effort to cut their cost to serve—so Amazon really started focusing on regionalization.” 

Meanwhile, competitors like Walmart, with its drone partner Zipline, and Google, with its drone operation Wing, are beating out Amazon on the drone delivery front, according to a news story on MSNBC.com. 

That story notes that Amazon has completed roughly 100 airborne deliveries in two test areas, while Wing has made nearly 330,000 deliveries—mainly in Australia via DoorDash—and Zipline by Walmart has made more than 600,000, mainly consisting of medical supplies in Africa. Walmart, which also partners with drone delivery companies DroneUp and Flytrex, made roughly 6,000 drone deliveries to its customers across seven states in 2022, according to MSNBC. 

Amazon made no connection between the slow pace of its drone program and the ramping up of its ground delivery efforts, but the company noted that the creation of eight geographic delivery regions is aimed at getting deliveries out faster.  

“Previously, if a local Amazon fulfillment center didn’t have the product a customer ordered, it would be fulfilled from other parts of the country, costing the company more and taking longer to get to the customer,” Amazon said in an email. “As a result, Amazon made significant changes within its operations network to create eight interconnected regions in smaller geographic areas to better serve customers.”  

These regions contain a broad selection of Amazon products and are able to operate in a largely self-sufficient manner, according to the company. Not only will this reduce delivery times, it will also cut costs for customers, according to the Seattle-based retail giant.   

More than three-quarters (76%) of all purchases come from fulfillment centers within Amazon’s eight regions, the company noted in an email to WGB. “In addition, items have on average 12.5% less touchpoints before being delivered,” the company noted. “And the number of miles between where a product is fulfilled and the customer has been reduced by more than 15%.” 

The focus on regional efficiency also appears to have taken hold at Amazon’s top grocery store, Whole Foods. The grocer announced in April that it would cut hundreds of executive-level positions within the company and reduce the number of regions overseeing its more than 500 stores to six from nine.  

“We are evolving our operating structure and making adjustments to some corporate teams, so we can better support our stores as Whole Foods Market continues to grow and expand its reach to serve more customers,” a Whole Foods Market spokesperson told WGB in April.