A retailer's greatest competitive advantage is their ability to quickly and efficiently get orders online. It may mean delivering the order to the customer's home, but it could also be the customer picking up the order at one of the nearby retailers. Retailers who have their operations close to customers' homes stand to gain from this proximity.According to UBS Evidence Lab, an investment bank, this is one area in which Amazon still trails its major competitors. UBS estimates that Amazon has fulfillment centers within an hour of 77% Americans. This is a significant amount, but still far behind Walmart's nearly 5,000 US stores that put it within one hour of 99% of Americans, according to UBS estimates.Amazon's large investments in its logistics network have enabled it to deliver certain orders in under two hours. Walmart and Target, another Amazon competitor, have large networks of stores that keep them physically close and gave them at least one advantage during this pandemic. Both were able to use their stores to fulfill orders online, and shoppers can also collect their orders at the closest brick-and-mortar store.Target claims that in-store pickup makes it 90% cheaper than shipping an order to customers. This has helped retailers to increase their sales. UBS stated in its note that having the infrastructure to provide customers with the service they need when and how they want it is key to success in an omnichannel world is crucial.Amazon spends on its fulfillment networkAmazon has not slowed down in its pursuit to be the best. The pandemic boosted Amazon's sales and motivated it to invest more in its fulfillment capabilities. UBS reports that Amazon's 2020 capital expenditures on projects such as warehouses and aircraft amounted to $35 billion. This is more than double the amount it spent in the previous year and more than any of its competitors combined.UBS stated that a large portion of this money was used to expand its fulfillment operations. These investments include increasing its fulfillment and logistics network square footage by half, as well as its middle mile capabilities (incl. Amazon Air, & its last mile capabilities.Walmart and Target must continue to invest in their digital operations if the company wants to be competitive with Amazon online. It already holds 40% of the US ecommerce market, and it is growing rapidly.Amazon's continued spending is expected to continue increasing the percentage of Americans living within an hour of Amazon fulfillment centers.
