Amazon.com gets real. From todays WSJ.
<Tech Center
At Amazon's Distribution Center,
Cyberspace Hits the Real World
By PAULA L. STEPANKOWSKY
Dow Jones Newswires
SEATTLE -- Every morning at 5:30, the first in a parade of large trucks backs up to a warehouse in a gritty industrial area south of Seattle's downtown.
Awaiting them are jeans and T-shirt-clad workers who unload boxes of books ranging in subject from Jane Austen to pro wrestling, children's literature to the occult.
<Picture: [Go]>Company Profile: Amazon.com
The books are quickly sorted, given tracking numbers and placed on hundreds of steel bookshelves, where they await further processing. By the end of the day, thousands of books have come in one door and gone out the other to waiting U.S. Postal Service, United Parcel Service and DHL Express trucks.
This is the place where cyberspace hits the road for Amazon.com Inc., the company that, although not yet profitable, has seen its stock price quintuple in the last year and shown the world that retail and the Internet can go hand in hand.
When customers click through the menu on Amazon's Web site (www.amazon.com) and order a book or CD, they initiate a series of events that come to a head in this 80,000-square-foot distribution center, one of two at the heart of the Seattle company's operations.
The 24-hour south Seattle operation, located in this building since late 1996, is Amazon's first distribution center. It was followed in October of last year by one in Delaware measuring 200,000 square feet to handle the company's growing East Coast business.
Some books come here directly from publishers or wholesalers, while others come from Ingram Book Group's large distribution center in Roseburg, Ore.
For these Amazon workers, moving the daily quota of books is the prime directive. Unlike a typical bookstore, Amazon keeps very few books in inventory, something that helps keep overhead, and prices, lower.
"A lot of these books will be in and out by the end of the day," said Cedric Ross, the distribution center's training manager, as he surveyed the scene in the receiving area on a recent morning.
Being able to deliver books and music at good prices within 24 hours or a few days is the key to Amazon's success. This crew of mostly 20-something employees, many draped with portable cassette players, make it happen.
If you imagine Amazon's distribution center resembling a cluttered bookstore with steaming lattes and Pachelbel on the sound system, think again: This operation is built for speed.
When Amazon receives an order, a computer determines if the book is on hand or must be ordered. Depending on where the book is, it can be shipped in either 24 hours or within two or three days.
Once delivered, books are sorted swiftly onto shelves, using a numbering system and placement, that on the face of it, doesn't seem to make sense.
Since books are tracked by inventory number, not title or author, there is no apparent rhyme or reason to their organization upon the shelves. That's why two copies of the same book, such as a Winston Churchill biography, could be correctly placed two shelves apart. Same book, different tracking number.
The system was set up by an Amazon vice president with an extensive Federal Express background who is no longer with the company. Jimmy Wright, the company's chief logistics officer since July and a retired vice president of distribution at Wal-Mart Stores Inc., has contributed to it, Mr. Ross said. In mid-October, Wal-Mart sued Amazon, claiming Amazon's hiring of a number of former Wal-Mart employees was an attempt to steal its computer secrets.
After the books are shelved, workers -- called pickers -- comb shelves to find specific books based on how they will be shipped. One picker may fill between 25 to 100 orders a day, depending on their size, Mr. Ross said. Then those books are turned over in carts to a sorting crew, which scans the books by bar code and assigns them to a bin to be sorted by order.
Hot books that Amazon stocks in bulk to fill 24-hour requests are stored in larger bins. On a recent day, these included "The New Classic Cocktails," "Elvis is Alive," "Thinking in C++" and "Sister Wendy's Book of Meditations."
After a possible stop for a layer of wrapping at the gift station (antique map wrap is a customer favorite), books are packed, weighed and placed in big gray carts or on pallets for shipping. The same process applies to CDs.
"One department always looks out for the other department," Mr. Ross said. "Instead of being highly competitive, we try to see ourselves as one big team."
Mr. Ross said many of the distribution center's employees relish the early and late hours because it gives them time to pursue other interests in Seattle's increasingly active arts scene. A number of employees are musicians and others are artists or writers.
They also find themselves doing something else.
"I've found myself buying more books than I ever have before since I've worked here," said Mr. Ross, who doesn't have to pay shipping costs if he himself orders from Amazon.>
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