4 Key Takeaways From The Amazon Headquarters Site Selection Process

4 Key Takeaways From The Amazon Headquarters Site Selection Process

December 3rd, 2018

by Ian Smith

When was the last time that a company looking to expand receive so much press coverage?   From the announcing that the company will be looking for new locations to execute their growth strategy to putting a shovel in the ground, there are very few companies that can grab the attention of the media.  Amazon placed themselves on the radar of  local and national news outlets with their recent hunt for the locations of their new headquarters.  The entire process took the retailer 14 months to select two cities from a list of 238 metropolitan areas.  From September 2017 to November 2018, interested onlookers witnessed how the “beauty contest” to win the heart of Jeff Bezos played out to a point that it became an opportunity to learn about the dynamics of the site selection process based on what has been published on the web.

Here are four takeaways to reflect upon.

  1. 200 plus cities had a BIG dream

The thought that 200 plus cities made a strong effort to woo Amazon to their respective jurisdictions is incredible.  Amazon pitted major metropolitan cities against smaller and upcoming cities to make the retailer’s shortlist.   Cities such as Warwick (Rhode Island), Hickey (North Carolina) and Charles County (Maryland) were able to dream big to think that they had an opportunity to land Amazon’s headquarters.  From a site selector’s point of view, having an array of locations to choose from allows some degree of flexibility in terms of finding the ideal fit for their clients.  The amount of possible locations will be dictated based on what the clients’ needs and wants to be successful and what cities can offer to investors.

  1. A city’s digital footprint of a bid can be valuable

Cities that decided to submit a bid to Amazon either created a microsite or another section of their website for investment attraction to sell itself.  Here are a few examples:

  • Greater Halifax Partnership (Halifax, Nova Scotia) – The agency created a microsite (HalifaxHQ2) complete with arguments why the retailer should place their new headquarters in Halifax.  To illustrate this point, the agency used Amazon’s logo in an image that can seen in Figure 1.

   Figure 1: Greater Halifax Partnership Use Of Amazon's Logo

  • The City of Boston’s website for the Amazon bid is composed of videos to promote the city, a series of testimonials (as seen in Figure 2), letters of support and further details on the city as a location to invest.

                                                         Figure 2: Collection of Testimonials Available On Boston's Amazon Bid Page

After visiting a handful of sites from candidates that did not make the short list, it was interesting to see that cities have left their proposals online free to read and download.  Could it be that these cities are leaving a digital footprint online in the hopes of site selectors and or other investors will make a cold call based on what was offered to Amazon?

  1. Companies are not obligated to put struggling cities on their shortlist

When Long Island, New York and Arlington, Virginia were announced as winners in Amazon’s site selection process, some in the media were annoyed at the choices.   The two locations are thriving economically and were point out to be candidates that really did not deserve the thumbs up from Bezos.   Many believed that the retailer should have considered cities that are in need of jobs within its jurisdictions.

In a perfect world, companies may select to expand to locations that may need an economic stimulus to serve as good corporate citizens; however, site selectors or potential investors do not operate in a perfect world.  Site selectors have their own list of criteria or approaches to pick the best location regardless of whether different cities are in need of job creation initiatives.

  1. What is the Return On Criticism?

The biggest takeaway from the Amazon headquarters site selection exercise is the amount of financial incentives that were offered and the criticism that was received by the retailer and the cities vying for the headquarters.   In April 2018, CNET published an article providing a rundown of what the final 20 cities offered Amazon in terms of financial incentives.  The incentives ranged from billions of dollars in tax breaks  to subsidies.  Taking a closer look at the cities that were awarded the headquarters, Amazon can now take advantage of:

  • $2.8 billion of incentives from New York City for the Long Island location
  • $800 million of incentives from Arlington and Virginia governments 
As announcements were made about the successful bids, critics were quick to argue that the retailer is worth billions of dollars and should have not qualify for such incentives.   Site selectors and investors that are faced with such critiques must be prepared to deal with repercussions of accepting and using incentives in different forms.
It will be quite interesting to see if other GAFA members (i.e., Google, Apple, Facebook, Amazon) will go through the same process as Amazon followed.  Without a doubt, similar fan fair will be made in the media in terms of how cities will try to lure the investor, however; will site selectors learn anything from what Amazon did to pick sites for their next headquarters?

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