In a recent three-month quarter, Amazon generated $11 billion of revenue from it third-party services. | Photo by Europa Press News/Europa Press via Getty Images
On this episode of Reset, learn the fascinating reason a lot of products you buy online make a pit stop in rural Roundup, Montana.
As increasingly more shopping is done online, the solutions online retailers devise to meet delivery demands have become ever more patchworked.
One such workaround is something called a prepping center, where packages are delivered from third-party retailers — people who use platforms like Amazon to sell their own stuff. Once there, they’re unboxed, checked for damage, repackaged to Amazon’s standards, and sent on.
The Verge’s investigations editor Josh Dzieza discovered a cottage industry of these prepping centers that popped up in the small town of Roundup, Montana, an hour away from Billings. He wrote a story about how the tiny town became a hub in Amazon’s supply chain and talked about it with host Arielle Duhaime-Ross on this episode of the Reset podcast.
According to Dzieza, here’s the journey an item purchased online might take on its way to your doorstep:
“You can have a [third-party] seller anywhere in the world buy 100 dog beds from Target online. Those dog beds ship from a Target warehouse in San Bernardino, and then go to the prep center in Roundup, where they’re unboxed and re-boxed. Maybe Amazon says send 20 to Illinois, 20 to Kentucky, the rest of them to Utah. And then from there, the rest of them go out to customers.”
This system is so popular that there’s a very good chance your order will pass through Roundup — population 1,863 — this holiday season.
But why is it necessary for any item to go through so many layers of packing, unpacking, and repacking? “Amazon has fairly strict requirements [and a streamlined process] for how goods arrive at their fulfillment centers,” Dzieza explains. This extra step helps third-party sellers meet Amazon’s shipping demands.
“In the year 2000, it actually started with big retailers who were the third parties. Toys R Us was one of the biggest back in the day,” Del Rey recalls. Over time, retailers built their own online stores, leaving small merchants and “one-person shops” to account for nearly 60 percent of total sales on Amazon today.
This system is lucrative for the online powerhouse, which charges sellers a listing fee, takes a cut of 8 to 15 percent, charges to store goods in Amazon warehouses (which is required to qualify for Prime), charges to handle customer service shipping, and charges to advertise these products on its site.
“Without third-party sellers, Amazon would be much more like a traditional retailer having to stock all the inventory themselves. But this [current system] allows Amazon to have what might be the biggest online selection in the world,” Del Rey points out.
Below, we’ve also shared a lightly edited transcript of Dzieza’s conversation with Duhaime-Ross.
So this started when I was talking to an Amazon seller for another story and he mentioned that he never really handled his goods. He bought them online from other retailers and had them shipped to a building somewhere where they were unboxed, re-boxed and sent to Amazon unboxing and re-boxed.
Why did they have to be re-boxed?
That’s what I was surprised about, too.
Amazon has fairly strict requirements for how goods arrive at their fulfillment centers. Work in the fulfillment centers is partly automated and partly just intense physical labor. And to streamline the process, there are requirements for how things arrive. You can’t have multiple barcodes because someone might scan the wrong barcode, can’t have packing peanuts because they get everywhere.
So if you buy something from some other retailer, you have to unbox it, make sure it’s not broken, re-box it according to Amazon’s specifications, and send it to Amazon.
This process of unboxing and re-boxing to Amazon’s specifications — it’s called “prepping.” And Roundup is an unlikely hub for it.
At last count there were nine prep centers, I think. And more people are training.
So all this unboxing and re-boxing activity in Montana, this cottage industry of preppers, how did this even come about? Josh went to Montana in September to find out.
Prepping got started in Roundup because of this woman named Kristal Graham. Kristal’s brother died and left a bunch of books behind.
To sell them off, she started selling on Amazon and then realized that you can sell pretty much anything on Amazon. So she started buying other things to sell — razors, KY jelly, first aid kits.
It soon came about that she had so many products that she couldn’t prep them all to send to Amazon. So she started looking around for services that would take that on.
That would prepare the packages for her?
Exactly. She went on the directory for seller services and saw that there were 15 such services at the time, but none in Montana. Sensing an opportunity, she decided to set up that kind of service herself.
Kristal hired someone named Linda McAfee to help. We met at the Busy Bee Cafe, which is a diner when get into Roundup.
Kristal had hired Linda McAfee and then they had a falling out. And Linda left and went into business for herself. And that was sort of where the prepping explosion in Roundup happened.
She started getting things shipped to her property and packaging them and repackaging them herself.
Okay. So now we’re at two prep centers in Roundup, Montana.
Then Jill Johnson hears about this from Linda’s neighbor. Jill had just been laid off from her state job and started trying to get Linda to show her the ropes.
Jill started interning with Linda. Essentially, they became friends. And then Jill chose a name and started prepping from her property. So now there are three.
And then Jill, who is the one who moved to Roundup to ranch, it came time for her to bring cattle down out of the mountains. She reached out to Sandi Green.
Sandi starts getting all these packages for Jill and she’s curious what the deal is.
Because she doesn’t know what’s going on?
She understood it to be some sort of mysterious online business but is curious what exactly is going on as the porch fills up with boxes.
Jill comes back out of the mountains and explains what’s happening. And Sandi thinks this sounds like a great flexible job.
So this is spreading through Roundup.
It’s spreading through word of mouth. And they’re just training each other.
JILL JOHNSON: We have a group text. If anybody has questions.
LINDA MCAFEE: They can go in the group, text a picture or ask a question. And you see me or Jill jump in there and answer them out.
They were somewhat confused about why I was interested in this industry. Their sense is that this is a small, quirky thing they do. But they were quite warm and nice and eager to talk about the business.
A lot of Amazon sellers come and go, but some of their customers have been around for a long time and they have personal connections with these people who are all around the world and most of whom they’ve never met.
LINDA MCAFEE: The majority of my sellers are international. I have them up in Malaysia, Australia, Europe, Canada. And a lot of them are starting out as newbies. Sometimes they need a little kickstart. They’re kind of like children when they first start, you have to play along.
SANDI GREEN: It’s a lot of hand-holding.
I can’t help but notice that every person that you’ve mentioned in Roundup that does this prepping work, they all seem to be women. Why is that?
That is true. And that was something I asked them about. And they weren’t really sure why that was the case. They said it’s possibly because a lot of them were working from home, taking care of family. Some of them had husbands who worked in mines nearby.
JILL: But you know what? We’re women that have our own businesses. What we’ve gotten all these women that are usually single. I mean, I have a boyfriend. She’s got a husband but he’s working in Billings and stuff. And, not many women get this opportunity.
They weren’t really sure. But it was particularly striking to me because talking to Amazon sellers, it can be sort of male dominated. It was interesting to me that this subculture, at least in Roundup, did tend to be women. It was entirely women in Roundup.
And are people making money from this? This almost sounds like a multi-level marketing scheme.
They are. It is not super lucrative. They make $1 per package that they prep. It can fluctuate.
Sandi, for example, had a good day when she had hundreds of miniature animal toys to prep. At $1 each, you can prep them quite quickly.
I feel like if it’s $1 per package, then you really want very small things.
Exactly. If you get stuck with a bunch of televisions or strollers or something, your hourly rate really plummets.
They make good money. They said it was better than they can get at other lines of work.
Sandi did give me a rate for her miniature animal spree, which was $49.50 per hour for those. So quite good. But another day it could be a bunch of TVs, we don’t know.
It’s not the most efficient system, is it?
No. One of the things about Amazon is that it is extremely efficient about the things that it focuses on optimizing. But because it’s so big, it can create weird inefficiencies like this of people trying really hard to capitalize on scale.
It’s interesting to hear you talk about how Amazon just sucks in all these goods from various stores and companies across the country. It kind of feels like it has this special power.
Yeah. I mean, Amazon is this gigantic platform now that has made buying things extremely convenient and easy. And when you have a store like that, it can create this gravitational pull on consumer goods from all over the country of things flowing into Amazon fulfillment centers to be sold.
And before they got there, they passed through a place like a prep center.