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COMPANIES TRAVEL & LEISURE

The last word: How Amazon keeps the goods flowing for Christmas
By Michael Kavanagh Published: November 27 2009 02:00 | Last updated: November 27 2009 02:00

In Nick Hornby's novel High Fidelity , the narrator and music retailer Rob describes how he rearranges his record collection in response to life's crises. Sometimes he orders them alphabetically. Sometimes according to their date of release. And sometimes in the order of the girlfriends he had when he bought them. Amazon, the leading online retailer, faces a similar dilemma of how to arrange the stock in its giant warehouses as it prepares for the Christmas rush. The company, which started out as an online retailer of books and then CDs, now offers products as diverse as shoes, cosmetics and vacuum cleaners. But unlike Rob's sentimentally-ordered shelves, Amazon's arrangement of its goods - which must be hand-picked ahead of sorting for particular orders and dispatch - looks so random as to border on chaos. At one of the company's UK distribution centres, north of London near Milton Keynes, millions of goods are stored on shelving systems that dominate a site the size of eight football pitches. Piles of television personality Davina McCall's Super Body Workout DVDs are stacked next to school science textbooks and not, as one might expect, next to the product that Amazon's website suggests is most likely to be bought with it - 10 Minute Solution: Blast Off Belly Fat . Elsewhere, hardback copies of A History of Christianity are juxtaposed with cordless electronic sweepers even though, despite the dictum that cleanliness is next to Godliness, there is little sales connection between the two. Allan Lyall, Amazon's vice-president of European operations, insists there is cold commercial logic lurking in this apparent chaos. Hand-held computers help guide hundreds of picking-staff along kilometres of shelving to the location of ordered goods. Popular-selling items are strategically placed in several locations rather than at just one point. This geographical spreading of hit items such as Dan Brown's The Lost Symbol , DVDs of the film Mamma Mia and CDs by Canadian crooner Michael Bubl across the 550,000 sq ft, multi-storey site helps picking-staff to minimise the distance and time spent walking to fulfil several orders simultaneously. For example, when collecting more obscure items, staff do not have to return to a single point to collect the latest Harry Potter tome. This structure is crucial to enabling Amazon to deliver goods, sometimes on the same day that they are ordered, for some UK postcodes. During the key Christmas sales period, more than 1,000 workers, mostly temporary staff, will be working at the facility, one of five such centres in the UK. At each facility, picking-staff may walk several kilometres a day. But, says Mr Lyall: "We want them to travel the shortest possible distance - the shortest distance means the lowest cost." While this stage of Amazon's order fulfilment is labour-intensive, once goods are sorted for parcelling, automation and scanning technology largely take over from the human hand. At its peak last year, Amazon's UK operations dispatched 1m items on one day. Orders peaked at 1.4m items on Monday, December 8. Amazon expects another "cyber Monday" peak this December.

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Meanwhile, the company's long-term strategy of using multiple logistics companies helped to minimise the impact of Royal Mail's postal strikes earlier this year. Amazon is also working to solve a perennial stumbling block for some potential customers who cannot be at home or work to receive large items that cannot be delivered through a letterbox. In France, for example, it has teamed up with Kiala, which operates "Point Relais" or collection points at a network of grocers, dry-cleaners and newsagents, which are open most hours. In Germany, customers can use Packstation, a service run by DHL, which operates automated booths for letter and package collection at busy locations such as railway stations. The expanding service is particularly popular with busy professionals for whom time is as valuable as it is to Amazon.
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