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Amazon.com, the world’s largest online retailer, owns 80 enormous warehouses or fulfillment centers around the globe to serve the 30 million customers that use buy stuff through the portal. These warehouses are massive, with a singe building taking up 1.2 million-square-feet and containing miles of conveyor belts. The logistics of running a single warehouse with millions of items are mind-boggling, even before you add in the fact that Amazon doesn’t use any robots. Everything is tagged, placed and moved around by human hands. Even more stupefying is the fact that Amazon doesn’t store items in an organized way. Everything is stored at random but their location tagged with barcodes. Amazon calls the system ‘chaotic storage,’ and this is one the key factors to Amazon.com’s success in online retail.
Essentially, a product is stored wherever there is free space. For instance the TV might not be with other electronics and the soap might not be with the pharmacy stuff. Items are organized by barcodes and shelved by code, instead. Often things that don’t go together end up in the same place. That craziness actually increases accuracy, reducing possible delivery mix-ups.
The chaotic storage system allows Amazon to utilize more shelf space and doesn’t force employees to waste time organizing products. Locating items is a breeze thanks to computer-generated product lists, which help warehouse workers easily locate the specific products and prepare them for shipment.
The real advantage to chaotic storage is that it’s significantly more flexible than conventional storage systems. If there are big changes in a product range, the company doesn’t need to plan for more space, because the products or their sales volumes don’t need to be known or planned in advance if they’re simply being stored at random. Free space is also better utilized in a chaotic storage system. In a conventional system, free space may go unused for quite a while simply because stock is low or there aren’t enough products to begin with. Without any kind of fixed positions, available shelf space is always being used. It’s also a major time saver to not organize products as they come in.