Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Will Amazon enter the construction jungle?

James Wilmore

“We’ve had some successes over the years in our quest to meet the high expectations of customers. We’ve also had billions of dollars’ worth of failures along the way.” 

This was Amazon founder Jeff Bezos, the world’s richest man, writing in his annual letter to shareholders last month.

How construction firms would love to be able to afford that amount of failure. 

It is a reminder of the US tech giant’s clout, just 24 years after it began life in Mr Bezos’ Seattle garage. Today, it is the world’s fourth-most valuable company, worth a cool $760bn. 

What makes Amazon so powerful – and potentially frightening – for all sectors is its ability to understand its customers through its use of data analytics. This helps drive its voracious appetite for growth, which has gone up a gear recently to include credit cards, filmmaking and home security systems. 

Every industry, it seems, is a target for Amazon.

But as today’s in-depth feature explores, could Mr Bezos ever come after construction?

The company is seen as an online behemoth, but its appetite for physical space and buildings remains insatiable.

In the UK alone last year, it opened distribution centres in Daventry, Doncaster, Warrington and a huge facility in Tilbury, Essex. It will unveil its 17th UK site this year.

In the US meanwhile, Amazon has been opening high street bookstores and has used its $13.7bn acquisition of Whole Foods to instantly secure a significant nationwide physical footprint.

There are opportunities for UK contractors. For example, it is using ISG to build its mega-shed in Bristol. And if it ever decides to launch physical stores here, there will be refit jobs. 

But asked about a possible Amazon launch into construction, retail analyst Neil Saunders told me: “If Amazon ramps up physical expansion, I can see this happening [entering the construction market].

“It likes to vertically integrate aspects of its operation, such as delivery, so it is possible that it will create its own construction and development team.

“At the very least, the team might focus on the refurbishment of Whole Foods stores. But when you add warehouse expansion, new shops and offices into the mix, then there is the volume necessary to support such a team.”

As Mr Bezos cited in his shareholder letter, not every Amazon venture is a success.

But with the firm’s increasing need for physical space – be it warehouses or shops – the economics of building things itself could be tempting. 

As the industry heads towards more automation, the need for a vast workforce reduces. Couple this with Amazon’s investment in artificial intelligence, the use of which is slowly trickling through to construction, and Amazon may yet be tempted. 

The prime deterrent could be construction’s notoriously poor risk:reward ratio. Yet Mr Bezos is seemingly unafraid of sustaining low-margin divisions to gain market share. 

You have been warned. 

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.