Amazon Rents Out Its Warehouse Storage Space to Make Extra Money

March 22, 2012 · 0 comments

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Amazon currently has around 69 warehouses and it’s putting that space to good use. The company squeezes additional profit out of every square foot of its fulfillment/distribution centers by offering third parties a number of services related to inventory storage and order fulfillment.

In other words, Amazon is also running a warehouse business.

For example, the company charges third party retailers and manufacturers $1 to pack an item, 37 cents per pound for handling, and 45 cents per cubic foot of storage. Items fulfilled by Amazon are also eligible for Amazon Prime shipping.

This is one reason why Amazon’s recent acquisition of warehouse robot company Kiva Systems makes sense. The robots makes Amazon’s warehouse more efficient and helps Amazon cut back on labor expenses both for itself and its third party operations.

You can read more about this topic in depth in a great recent Businessweek article.

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