Amazon to add five fulfilment centres in India, boost warehousing capacity

Amazon is continuing to pepper India with its warehouses, announcing the opening of five new fulfillment centres, which will be ready in the next six months. This comes at a time when logistics and warehousing is becoming one of the most important investments for e-commerce companies in the country.

To be located in Bengaluru, Mumbai, Delhi, Vijayawada and Kolkata, the five new centres will serve Amazon's core e-commerce business and will take the total number of warehouses of the company in the country to 67. The new centres will partly contribute to a 150 per cent increase in storage capacity for Amazon in 2018, when compared to the previous year.

“We have been constantly and consistently making investments to expand the fulfillment capacity both for storage and processing for our sellers so that we can deliver larger volumes as we are growing,” said Akhil Saxena, vice-president of customer fulfillment at Amazon India. “Earlier this year, we had also announced the opening of 15 fulfillment centres for our Amazon Now business.”

With the new centres, the company will be able to retain the position as India's largest warehousing space provider. The new warehouses will be larger than the average fulfillment centres, but will not be as large as its centre in Hyderabad that spans 400,000 square feet. Amazon will, however, take the retailers total storage capacity up from 16 million cubic feet to 20 million cubic feet.

Along with the increase in warehouses and storage space, the company is also growing downstream logistics capabilities and now has over 200 delivery stations across the country.

While these serve the company's biggest markets in India, the firm has also partnered with service providers who can stock products for last mile deliveries and has 350 such centres across 320 cities.

“In terms of the footprint, we will be more than five million square feet, compared to 3.5 million last year. This is the expansion we are talking about and we are making these investments for both our sellers and our customers,” Saxena added. “This will obviously help us make faster deliveries to our Prime customers as more inventory is kept closer to customers."

While Amazon is maintaining scale through smaller warehouses, rival Flipkart is looking at building a network of few but massive warehouses. The Bengaluru-based firm in March said it was looking at acquiring 100 acres on the outskirts of the city to build a massive logistics park that would rival Amazon's one million plus square feet warehouses in the US and other large markets.

Flipkart said the project would be its single-largest investment over the next 5-10 years, with the centre slowly being built up to accommodating 4.5 million square feet of warehousing space. In an interview with Amit Agarwal, head of Amazon’s India business last year, he said over half of the company's investment in the country had gone into building infrastructure.

Neither Amazon nor Flipkart are allowed to sell products on their own, but warehouses are where both companies stock products of the sellers on their platform. Apart from making it easier and faster to ship products to customers, these warehouses also help both companies lock in inventory from sellers, keeping it out of the hands of their rivals.

Saxena said while Amazon was not building massive warehouses in India at the scale of what it does in the US, they would become a reality given the pace of growth in the country. The size of Amazon's first warehouses in Bengaluru were just 100,000 square feet, but now they are beginning to close in on half a million square feet. However, given the unique dynamic of India, the company will continue to have a large number of warehouses to stock products as close to customers as possible.