Inside Newegg NJ: A New Warehouse and Another Contest
by Anand Lal Shimpi on May 20, 2008 12:00 PM EST- Posted in
- Trade Shows
How a Bill Becomes a L...err, How an Order Becomes a Tote
If Newegg's warehouse had a pulse it'd be a scary thing, as the system is unbelievably self-aware. The warehouse holds around 20,000 unique products and it is aware of the location and quantities of each and every one of them.
This tote is someone's order, I didn't tinker with it
Totes galore
There are tons of red totes that are constantly traveling through the warehouse on automated conveyor belts. They will keep circling until one of them is needed. When an order comes in from the website and is cleared for processing it is assigned to a tote; the order and the tote are married and are only separated once the order is boxed and ready to be shipped.
The totes run by these barcode scanners constantly, they monitor the contents of the tote and the order, if the order isn't complete it keeps getting routed through the warehouse until every last item is in there.
The tote is routed to various locations in the warehouse and filled by hand before being sent back out the conveyor system. The actual filling of the tote is done manually, but tracking the tote and deciding where it has to go is entirely automated. The warehouse knows where to send the totes and it can even detect traffic jams and slow totes down if need be.
Speedy totes
The entire system is optimized so that if the product is in stock in the warehouse closest to you, and your order is placed by 2PM EST, it will ship out that same day. Thanks to careful placement of these warehouses, you should be able to get what you ordered within a couple of days without having to pay for more expensive shipping. It's good to see that Newegg's goal of optimizing for ground shipping is still top priority.
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DMasters - Friday, May 23, 2008 - link
Hard to enter a contest when the entry page doesn't work correctly.....Jynx980 - Friday, May 23, 2008 - link
The box maker must be crazy fast, but if it could tape up the bottom Joe Schmoe there wouldn't be getting carpel tunnel from taping up boxes all day. Quantity is the important factor I guess. Just seems a bit odd that the New Egg factory doesn't have a machine that tapes up boxes.I noticed a red X on the The Picker page. Does that mean that nothing on that row is needed when filling a tote?
Minor typo on the index page, last paragraph first sentence:
everything i just -> everything is just
wfarid - Thursday, May 22, 2008 - link
Yea that warehouse is a right near my house (less than a minute drive). It's been there for a while know. I always wanted to see what went on inside that white warehouse and now thanks to this article I know!Graviton - Wednesday, May 21, 2008 - link
Does anyone have any idea where Newegg buys some of it's products from? Like.. let's take Intel processors as an example. Intel's published reports (and my sources from all the major authorized distributors confirm) that the price authorized distributors pay is equal to or greater than the price Newegg sells those same items for. In addition, the line from all the Intel people I've talked to is that they don't sell to Newegg directly, and they are trying to give as much incentive as they can for people to buy through authorized channels. Are they somehow able to keep the shelves stocked solely by buying things from overstocked or failing companies? Are some products a loss leader perhaps? I've never been able to find any answers to those questions. Some places are just completely gray market or are obviously making $20 or whatever on things (which works out fine when coupled with high volumes). But Newegg's prices are just unnatural. So what gives?drebo - Wednesday, May 21, 2008 - link
I know that atleast some of the product Newegg gets is from Ingram Micro (the largest electronics distributor in the US, if not the world).The prices Intel tells you are "list" prices. Companies can charge whatever they want for product. Newegg has formulas and business models that say how much they can mark something up over what they pay dependent upon their volume and various other factors, while still remaining competetive. Newegg is a wholesaler. They're not a retailer or distributor. They're somewhere inbetween.
Graviton - Wednesday, May 21, 2008 - link
I was specifically referring to the prices Intel charges authorized distributors. These prices are published by Intel every time there's a change. The price most often discussed on the tech news sites is the price per 1000 units. However, the raw PDF released by Intel has other prices for other quantities. But whichever way you slice it, if Newegg has to buy through authorized channels, either they or the distributor have to be losing money. I can understand the distributors charging a little less per unit for large orders, but they can't charge less than they themselves paid for things (they are businesses after all, and not charities). And if Newegg isn't buying through authorized channels, then they ought not to be able to keep those items (especially the newest stuff) in stock consistently. And that's why it seems so weird. I should also note that I am not referring to most items that Newegg sells. Only some items fit into the "how can that price be possible?" category. Intel processors are one of those things.strikeback03 - Thursday, May 22, 2008 - link
Most if not all the expensive Intel processors sell on Newegg for well above the price per 1000 cost. Are the cheaper processors below their price per thousand?Graviton - Thursday, May 22, 2008 - link
I've seen them be less or more. It depends on the month. The current Intel prices on the Intel Investor Relations site show Newegg is anywhere from about $7 to $70 over distributor cost. On the most expensive stuff they might just be able to squeak by with a profit margin. But with the cheaper stuff I don't see how. The distributor (if that's where it came from) need to make a profit, and then Newegg offers free shipping. So, they might just break even or lose a little on those items. They may treat them as loss leaders. They don't actually make enough on them, but they are hoping you buy other things at the same time.johnsonx - Wednesday, May 21, 2008 - link
I don't know if that's correct that NewEgg gets their product from Ingram Micro, at least not in the way you appear to mean it.Yes, some things that you order from NewEgg do drop-ship from an Ingram Micro warehouse. This is somewhat amusing in itself, since I can often buy the same item from NewEgg for less than I can from Ingram, yet either way the product comes from Ingram! NewEgg is not unique here though... many times when poking around online sites looking for product, they'll have a 'real time stock availability' thing... click that, and they list all of their 'warehouses' that just happen to all be in the same cities as Ingram's warehouses - bizarre coincidence, yes?
However, I do not think that the products that NewEgg carries in their own warehouses come through Ingram Micro first.
NewEgg is associated with ABS Computer as well. I've received product from NewEgg in the past that was originally shipped to ABS. Some OEM's may sell to ABS, which then diverts it to NewEgg. Grey market? Maybe, but a really light, almost pleasant shade of greay.
RandalH - Wednesday, May 21, 2008 - link
Newegg became much more expensive for me when they opened the Tennessee warehouse. I questioned them via email why they would put their distribution center in the state with the highest sales tax in the nation (nearly 10%). They said it was to serve me better. But honestly, I was getting orders quickly anyway, and ironically, most of the stuff I've ordered since then has come from other warehouses; mostly Edison and Whittier, CA. Since Tennessee is a long, narrow state and I'm near the eastern border, I'm only a couple of hundred miles or so closer to the Tennessee distribution center than to the Edison NJ warehouse.