Amazon Returns to the Lone Star State

It was just a few years ago (2011) when Amazon closed its Dallas-based fulfillment center due to a disagreement over state taxes. Now it appears that Texas and Amazon have reconciled. Amazon has just announced that it will be opening three new fulfillment centers in Texas in the upcoming months.
Amazon has recently changed its opinion on state tax collection in other states (including New Jersey, California , and Pennsylvania). With the opportunity to move into these states, Amazon opened more than 20 new fulfillment centers in 2012. The three in Texas will add an additional 3.3 million square feet of warehouse space. The new locations will be:

• Schertz (near San Antonio)
1.2 Million square feet
Will handle large items

• Coppell (near Dallas)
1 Million square feet
Will handle large items

• Haslet (also near Dallas)
1.1 Million square feet
Will handle smaller items like books, small electronics and DVDs

Having more fulfillment centers helped Amazon dropping the amount of shipping costs within its yearly budget. In 2011, the shipping costs for the holiday season covered 5.4% of Amazon’s budget for that quarter. In 2012, the amount for that same time period was only 4.5%.

Not only will the state benefit from the taxes collected, the three locations are projecting to hire more than 1000 workers (and this number will most likely increase dramatically during the holiday seasons).

Around the world, Amazon currently operates 79 fulfillment centers.

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Amazon Considers Same-day Delivery

Amazon is working toward revolutionizing ecommerce yet again. To place itself in direct competition with retailers like Walmart and Target, Amazon is focusing on developing a business model that will allow it to deliver products to its buyers the same day the order is placed.


One change Amazon will have to make in order to move to this type of business successfully is revising how it handles state sales tax. Amazon is known as a fighter of internet commerce sales tax. It has excluded states like North Carolina, for example, from its affiliate program and its fulfillment warehouse plans due to the state’s instance on requiring Amazon to pay state sales tax. To make the same day delivery, Amazon will have to “play nice” with more states to create fulfillment centers that will allow its orders to qualify for the same day delivery option.


Amazon has become more willing to pay state taxes recently. The company is opening a new fulfillment center in New Jersey, a state that had pursued Amazon for state taxes in the past. Amazon has agreed to begin paying taxes to that state within the next year and a half. New Jersey will benefit from the additional sales tax along with income and property tax, as well.


How will this affect us as sellers? One by-product may be shipping products to additional fulfillment centers. Instead of having a couple of larger shipments to a few main warehouses, we may be shipping smaller boxes to more warehouse locations. Of course, this may also result in shorter distances for our shipments to reach more local warehouses and possibly the opportunity for our shipments to be checked-in more quickly.


There have been other companies that have attempted to use same day delivery for its online stores but on a very limited scale. Sites like Kosmo and Urbanfetch offered same day delivery of their goods to Manhattan. Kosmo offered books, games, and DVDs while Urbanfetch offers medicines, groceries, and DVDs. Amazon currently offers same day service to many metropolitan areas throughout the country, which include:

Baltimore

Boston

Chicago

Indianapolis

Las Vegas

New York City (and parts of New Jersey)

Philadelphia

Phoenix

Seattle

Washington, D.C.

It will be interesting to see what it will take for Amazon to roll out this service on a larger scale. To find out more about the current same say service known as Local Express Delivery, click here.



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