Amazon picks Abu Dhabi for most cutting-edge fulfilment centre in the Middle East

New logistics hub will open in 2024 through partnership with Abu Dhabi Investment Office

Mohammed Al Shorafa, chairman of the Abu Dhabi Department of Economic Development and head of Adio, left, and Russell Grandinetti of Amazon. Victor Besa / The National

Amazon will build the Middle East's most technologically advanced fulfilment centre in Abu Dhabi through a partnership with the Abu Dhabi Investment Office.

The 175,000 square-metre site, expected to be completed by 2024, aims to create thousands of jobs, drive innovations in logistics and give local entrepreneurs and retailers access to new markets through Amazon.

“The addition of Amazon’s new fulfilment centre further boosts the emirate’s ecosystem by introducing new capabilities and an enhanced infrastructure that deliver benefits to other businesses," said Mohammed Al Shorafa, chairman of the Abu Dhabi Department of Economic Development and head of Adio.

The Middle East represents a massive growth opportunity for the Seattle-based technology giant, which is facing headwinds in its e-commerce business amid a US labour shortage and rising inflation and freight costs. Net online store sales in the third quarter rose 3.3 per cent to $49.9 billion, as pandemic-era delivery demand began to wane.

But it is a different story in the UAE, where the retail e-commerce market reached a record $3.9bn in 2020, according to Euromonitor, and is forecast to double to $8bn by 2025.

Amazon already operates three online stores in the UAE, Saudi Arabia and Egypt, and has five fulfilment centres in the region.

"We've been really pleased by the growth of our business in the UAE the last few years and so this is just a continuation of that progress," Russell Grandinetti, senior vice president for international customers at Amazon, told The National.

With Abu Dhabi's planned fulfilment centre, customers in the emirate can expect same-day or next-day delivery on some products and a broader selection.

Automation will be a central feature of the logistics hub, he added.

An automated conveyance system will move items point to point in the picking, packaging and shipping process and reduce the number of workers needed. Robots will stick shipping labels to boxes that will be custom-built for each item to reduce waste.

The building itself will also have a solar rooftop to generate on-site renewable energy and will be designed to accommodate zero-emission vehicles.

Mr Grandinetti identified two areas of technology where Abu Dhabi may help Amazon in developing solutions: electrification of its delivery fleet in warmer climates – which are tough on batteries – and geolocation.

The company, which is committed to reaching net zero by 2040, ordered 100,000 custom electric delivery vehicles from electric vehicle maker Rivian earlier this year.

In parts of the world, like in the Middle East, addresses are rare. Advancing geolocation technology would improve delivery times and solutions could be duplicated elsewhere.

All of this will require high-skilled employees, Mr Grandinetti said.

"One of the things that differentiates Amazon from many other big, visible technology companies is we create jobs at all levels of the income spectrum and at really meaningful scale," he said.

"We hope that'll happen here and over the next 10 years will create thousands of jobs here in Abu Dhabi at all levels."

Adio, which already has a partnership with AWS for cloud data centres, lured Amazon with incentives on land, construction and sustainable energy at the new site, for an undisclosed value. The government entity, which started operations in 2019, is responsible for attracting and facilitating investment in Abu Dhabi.

As part of the collaboration with Adio, Amazon will provide dedicated seller training over the next decade to entrepreneurs and local business owners.