Analysis: Amazon HQ split reflects sheer size, scale of company
After over a year of speculation and a contest in which major cities have vied for Amazon's favor, the technology behemoth has finally chosen New York City and Northern Virginia as the locations for its new headquarters.
The locations themselves are logical and do not come as any great surprise. However, the fact that Amazon has chosen to split its new HQ across two cities is a twist that, until recently, many did not see coming.
In our view, the split reflects two things. First of all, the sheer size and scale of Amazon and its interest across many areas of technology, retail, and various consumer services. This arguably warrants multiple HQ locations as opposed to a couple of large offices.
Second, Amazon's forecasted strong growth means it wants to avoid the issues it had in Seattle where its expansion caused problems with the supply of labor, property, and put pressure on general infrastructure. Being able to balance growth across numerous cities will help alleviate such issues.
The locations themselves make sense. New York is a global hub for many activities, including fashion and finance which are categories that Amazon wants to develop. The proximity of Crystal City to Washington, D.C., will be beneficial in terms of developing political links - something Amazon may need to do more of as it grows and comes under increasing political scrutiny. The Virginia HQ will also prove helpful if Amazon makes bolder moves into highly politicized and regulated sectors such as healthcare.
While other locations may be disappointed not to have secured Amazon's favor, it does not mean they will miss out entirely. Amazon is making enormous investments in warehousing, regional hubs and in retail stores. The company will expand both its customer-facing and back-end operations across America, and the world, in the years to come.
The locations themselves are logical and do not come as any great surprise. However, the fact that Amazon has chosen to split its new HQ across two cities is a twist that, until recently, many did not see coming.
In our view, the split reflects two things. First of all, the sheer size and scale of Amazon and its interest across many areas of technology, retail, and various consumer services. This arguably warrants multiple HQ locations as opposed to a couple of large offices.
Second, Amazon's forecasted strong growth means it wants to avoid the issues it had in Seattle where its expansion caused problems with the supply of labor, property, and put pressure on general infrastructure. Being able to balance growth across numerous cities will help alleviate such issues.
The locations themselves make sense. New York is a global hub for many activities, including fashion and finance which are categories that Amazon wants to develop. The proximity of Crystal City to Washington, D.C., will be beneficial in terms of developing political links - something Amazon may need to do more of as it grows and comes under increasing political scrutiny. The Virginia HQ will also prove helpful if Amazon makes bolder moves into highly politicized and regulated sectors such as healthcare.
While other locations may be disappointed not to have secured Amazon's favor, it does not mean they will miss out entirely. Amazon is making enormous investments in warehousing, regional hubs and in retail stores. The company will expand both its customer-facing and back-end operations across America, and the world, in the years to come.