One of the largest companies in the United States plans to move into a $25 million building in the Town of Tonawanda where its employees will prepare packages for the final leg of delivery to local customers.
The developer uses the code name "Project Bruno" and won't confirm the Fortune 100 tenant is Amazon, as The Buffalo News previously reported.
But the plans for a warehouse and distribution facility at TM Montante's Riverview Solar Technology Park — and a possible second Amazon location on Grand Island — fit with the online retailer's determined expansion of its delivery system.
"Amazon has been spending huge amounts of capital to build out its network," said Marc Wulfraat, president of MWPVL International Inc., a distribution consulting firm based in Montreal.
Amazon is opening more of its fulfillment centers, sortation centers and delivery stations — which all play different roles in its logistics network — in more markets in New York and around the world.
It's part of the company's effort to speed up delivery times, from a standard two days to as fast as one day, for its Prime customers.
"Bringing things closer to the consumer has always been their model," said Robert E. Rich III, founder and president of Buffalo-based ROAR Logistics, a subsidiary of Rich Products.
Amazon has pledged to bring one-day shipping to more of the country. As of Tuesday, 10 million products were eligible for next-day delivery, along with same-day delivery in some markets and two-hour grocery delivery from Whole Foods Market.
It's a boon for last-minute Prime shoppers, but it puts pressure on Amazon's logistics network — and on its competitors, from big-box retailers that have boosted their own delivery systems to mom-and-pop stores struggling to adapt to the e-commerce revolution.
"If Walmart and Target and these guys aren’t on notice yet, then they’re whistling past the graveyard," said Rich, who estimates he gets five to 10 Prime deliveries each week at his home.
It ratchets up the stress in an industry Amazon has already turned on its head.
Some independent retailers are just getting the hang of having a website and fulfilling online orders. National big boxes are scrambling to overhaul digital commerce and supply chains to catch up with Amazon's two-day shipping window.
"With those additional facilities in the Buffalo area, Amazon will be able to deliver product within hours, not days," said Bob Phibbs, CEO of the Retail Doctor, a New York-based retail consultancy.
Walmart has devoted tremendous resources to revamping its digital efforts. It announced last month that it would introduce next-day delivery in three cities — two weeks after Amazon's own one-day delivery announcement.
But even retailers that manage to catch up to Amazon will face challenges in adjusting to the new way of doing business.
"The additional costs will probably eat into their margins, straining profits," said Phibbs.
Speeding up delivery
Whatever Amazon is doing in Buffalo Niagara fits with the region's history as a key transportation and logistics hub, given its location along the Erie Canal, the Great Lakes and major railroad lines, Rich said. Amazon also could leverage the sites' proximity to the Niagara Falls International Airport, which can handle cargo planes, he said.
Amazon would not comment on its plans when contacted by The News last month. The company already has a sortation facility in Lancaster and is eyeing another property on Grand Island for a larger complex, another source told The News.
It's no surprise that Amazon may build out its distribution network in Buffalo Niagara, said Wulfraat, the consultant.
The company concentrated on serving the largest markets first before reaching down to regions with a population of around a million, he said.
"This is a very important part of getting next-day delivery to the market," Wulfraat said.
When a customer in Buffalo places an order with Amazon, a worker at one of the company's fulfillment centers picks it off a shelf and sends it on its way within the cavernous warehouse to be packaged and readied for shipment.
The package is transported, usually by tractor trailer, to the sortation center in Lancaster, where it's sorted by ZIP code and prepared for delivery by the postal service or a private courier to the end customer, he said. The 525,000-square-foot Lancaster center serves customers in Buffalo, Rochester and out to Central New York.
But Amazon wants to get those packages — particularly groceries and other perishable items — to shoppers even faster.
That's why the company has built about 120 of what it calls delivery stations, with more on the way, according to MWPVL's count.
Semi-trucks from a sortation center arrive at the delivery station, where the packages are organized into the most efficient routes for delivery that day.
Amazon is encouraging employees to start their own delivery companies dedicated to working with the retailer, picking up packages from the stations and taking them on the last leg to customers.
Wulfraat said these drivers typically make 150 or 200 deliveries each day. The proposed Tonawanda site would have more than 300 parking spaces for these vans, typically Mercedes-Benz "Sprinter" vans smaller than a UPS or FedEx truck.
Amazon has plans to build a delivery station in Colonie, outside Albany, in an existing, 123,000-square-foot industrial building, village officials confirmed to local media.
The company also sought to build a $100 million, 1 million-square-foot warehouse in Rensselaer County, but neighborhood opposition has held up that project.
The possible Amazon location on Grand Island would be much larger than the Tonawanda facility, The News reported. Given that Erie County already has a sortation center, this means it likely would function as a fulfillment center, Wulfraat said.
Those buildings can range from 600,000 to more than 1 million square feet in size. They're up to four stories high and they can hold 10 million or 15 million items, he said.
Wulfraat expects Amazon would build a center for small sortable items here first. Those are products that are under 18 inches, such as most books, DVDs and small electronics.
Down the road, the company could add a large, non-sortable fulfillment center where it would keep an inventory of larger items such as TV sets, kayaks and barbecue grills, Wulfraat said.
Even though the Tonawanda and Grand Island locations are close to the border crossings with Canada, that's likely not a factor in Amazon's site selection process because the company has its own delivery network in Ontario and the rest of Canada, he said.
'Project Bruno' details
The developer hasn't filed a site plan with the Town of Grand Island for that potential project, so the Tonawanda development is further along.
The News previously identified the prospective solar park tenant in Tonawanda as Amazon, citing sources familiar with the project. The town Planning Board on Wednesday approved the final site plan and found the project wouldn't harm the environment.
The one-story, 117,000-square-foot building, including office space, would go on 24 acres at 5201 River Road, Town of Tonawanda.
TM Montante said in a filing with the town that the tenant wants work to start next month and finish in a year.
"Although aggressive, this timeline is critical to the company and securing this significant economic development project for the town," TM Montante wrote.
Montante states facility workers would sort packages for "outbound routes to enable last-mile delivery to customers in the Buffalo Niagara area."
The site now is vacant, wooded land in the solar park.
A covered staging area for vehicle loading would go on the west side of the building, which would be surrounded by 580 parking spaces for workers and delivery vans.
Byron DeLuke, TM Montante's director of development, said the tenant expects to hire a couple hundred employees.
James Hartz, director of planning and development for the town, said he first met with TM Montante representatives in March. He said no one's told him the project is for Amazon, but he understands why such a company would like this site.
"I think the main element for them is time," Hartz said. "So it's the fact that it's a shovel-ready site, that they have room to expand in the future and that they're connected, plugged in to the regional interstate."
News Business Reporter Samantha Christmann contributed to this report.