Amazon, the world's largest online retailer, is moving into California in a big way, with two new massive distribution facilities, 24-hour package pickup locations and high-tech hiring in Orange County.
A series of Amazon initiatives gives the company a growing presence in Southern California, while simultaneously pushing back against Apple, Google and Microsoft on the technology front and Wal-Mart, Target and others on the retail end.
"I would think conventional retailers would be a little nervous about that," said Anthony Dukes, a marketing professor at USC.
Last week, Amazon opened a 950,000 square foot fulfillment center in San Bernardino as part of a sales-tax compromise with California legislators. The company received a one-year reprieve from collecting the tax in California in exchange for promising to build fulfillment centers in the state. The taxes represent an estimated $150 million in annual revenue.
The first fulfillment center will be followed by another opening in Patterson in the Central Valley in the second quarter next year. The San Bernardino facility has created 700 full-time positions, and hundreds more seasonal jobs will be added.
Overall, the centers are expected to create 10,000 new full-time jobs and thousands more temporary ones.
The Southern California center comes a month after Amazon quietly slipped 20 locker pickup spots into locations such as Staples and 7-Eleven across Orange County.
The move allows online customers the option of shipping packages to a secure location rather than a home address, where they might be swiped from a doorstep.
Though the lockers generally offer only next-day or slower shipping options, retail industry observers say Amazon appears to be moving to same-day shipping in more locations. That could be a powerful weapon against local stores whose primary advantage is immediacy.
Large retailers and big-box stores are fighting back with price-matching and mobile apps that provide daily alerts and in-store discounts.
They're also stepping up their own e-commerce operations and offering more speedy deliveries as well.
Steven Osinski, a marketing professor at San Diego State University, said he thinks the lockers mostly are meant for security and are Amazon's response to packages being stolen after being dropped on doorsteps.
"I don't think it will have a major ramification, anything more than right now. People are already showrooming," Osinski said of the practice of people using stores such as Best Buy or Wal-Mart as "showrooms" to see and touch products before ordering online.
HIGH-TECH HIRING IN O.C.
Separately, Amazon subsidiary A2Z Research and Development leased more than 100,000 square feet of office space earlier this year across five floors at 40 Pacifica near the Irvine Spectrum.
The unit works on Amazon's Kindle, app, gaming and cloud platforms and continues to hire, though Amazon wouldn't say how many workers.
The Orange County unit helped develop the technology behind the Kindle Fire, the $200 Amazon tablet introduced last year. The introduction of that device is still sending ripples through the technology industry, forcing Google and Apple to prep lower-cost tablets to compete.
Amazon is prepared to profit on the low-cost device when customers decide to fill it with content from Amazon's digital storefronts or use it to buy real merchandise from the company.
GOOD FOR CONSUMERS?
On the retail front, Amazon's push for speed and convenience may not lead to the best outcome for shoppers if, increasingly, traditional stores can't compete with e-commerce and are forced to close, said Randy Bucklin, a marketing professor at UCLA.
"In the short run, it's probably good for consumers," Bucklin said. "In the long run, there's some risk that fewer and fewer brick-and-mortar retailers will be able to survive economically. Long-term, we may have fewer and fewer options."
If Amazon moves a step further and opens its own stores, the company would follow in the footsteps of Apple. Amazon officials declined to discuss recent news reports speculating that a Seattle store is in the works.
In the meantime, stores probably will have to elevate customer service to effectively compete with Amazon's distribution centers and locker system, USC Professor Dukes said.
"Rather than just offering products in a safe, secure and quick way, they have to offer something else Amazon doesn't offer," he said. "That might be a nicer shopping experience.
"At Wal-Mart you can get your eyes checked, (prescription) drugs. These are things Amazon cannot do."
At least not yet.
Most Popular Stories
- Obama, Ukraine Discuss Russian Incursion in Crimea
- Chinese May Have Spotted Malaysia Airlines Debris
- Social Media Causee Sleep Deprivation in Students
- First-time Jobless Claims Drop Unexpectedly
- Banks Buying Little From Minority Firms: Study
- General Electric Plans IPO of Credit Card Unit
- 'Candy Crush' Maker Files IPO
- SXSW Crash Kills 2, Injures 23
- First-time U.S. Jobless Claims Hit 3-month Low
- U.S. Business Inventories Up, Retail Sales Down