How A Tiny Town Became the Site Of A Major Amazon Facility

The global economy offers good money to people living in places with few job alternatives willing to do tedious work. JL


Josh Dzieza reports in The Verge:

Roundup, Montana is home to a growing industry of prep centers, businesses that specialize in packing goods to meet the demanding requirements of Amazon’s highly automated warehouses. Amazon only accepts goods that are packaged a certain way. Products need to be made ready for the automated gauntlet of the fulfillment center. Old barcodes and prices need to be covered up and new ones added. Glass needs to be bubble wrapped. Loose items need to be bagged. Someone needed to receive all those deliveries, make sure the products were in good shape, and repackage them according to Amazon’s specifications.

On any given day, thousands of packages from Walmarts, Targets, and stores around the country travel north along a two-lane road out of Billings, Montana — past the Tumbleweed Saloon, past cows grazing on empty rangeland, past the Busy Bee Cafe and stands of short pines — to the town of Roundup, where they will be unboxed, re-boxed, and sent off to Amazon.

At first glance, Roundup does not appear to be a hub for much of anything. Founded by homesteaders and ranchers in the late 19th century, it enjoyed boomlets as a coal town and a station along the Milwaukee railroad, but the coal tapped out and the train shut down, and the town’s population has now sunk below 2,000. Its Main Street is lined with homages to its frontier past: silhouettes of cowboys painted on boarded-up windows; dust-covered wagon wheels in otherwise empty storefronts; a noose dangling from “the hanging tree,” which a plaque explains was used to execute three cattle rustlers and two unlucky bystanders, cattle rustling being “considered one of the lowest forms of crime.” With a lone traffic signal flashing red, it just makes the cut for being a one-stoplight town. Roundup is, in short, just about the last place you might expect to become a nexus of international e-commerce.

But the geography of Amazon is strange: more than 150 million square feet of warehouses, distribution centers, and sortation depots located mostly in exurban sprawls and industrial zones, out of sight of the millions of customers who receive its goods on their doorstep.

Even by Amazon’s standards, Roundup is an oddity. There’s no fulfillment center, Amazon’s term for the enormous warehouses where it stores and dispatches goods. In fact, there’s no official Amazon presence of any kind. Instead, Roundup is home to a growing industry of prep centers, businesses that specialize in packing goods to meet the demanding requirements of Amazon’s highly automated warehouses.

It all started in 2015. Kristal Graham, 39, had moved to the area ten years earlier to work on a ranch, but when her brother died, she turned to Amazon to sell off his books. She soon found herself sucked into the world of Amazon Marketplace, the company’s platform for third-party sellers that now represents the majority of goods sold on the site. Though she had exhausted her supply of books, she found she could buy all manner of goods (razors, K-Y Jelly, first-aid kits) from other retailers and sell those on Amazon for a profit, too.

This sort of arbitrage is common and has helped Amazon both expand its catalog and sap its competitors. It’s hard for companies like Nike to refuse to sell on Amazon or for competitors like Target to lure customers away with steep discounts when someone like Kristal can just buy their wares and resell them at a markup. Amazon has made buying stuff so frictionless and habitual, delivery so fast — and for Prime members, free — that many shoppers don’t bother checking prices anywhere else.

But Amazon only accepts goods that are packaged a certain way. Products need to be made ready for the automated gauntlet of the fulfillment center. Old barcodes and prices need to be covered up and new ones added. Glass needs to be bubble wrapped. Loose items need to be bagged. As Kristal’s business grew, she needed help with all this unboxing and re-boxing, so she started looking for a prep center. There were about 15 at the time, she says, mostly in New Hampshire, Oregon, and Delaware, which have no sales tax. That way, sellers can enter the address of their prep center when they buy from Target’s website and pad their margins by a couple percent. Montana has no sales tax either, Kristal mused, and there wasn’t a single center in the online directory. Sensing an opportunity, she decided to give prepping a try. She chose a name — Selltec — and put it up on the directory, too.

“I was never meant to be a boss,” Kristal says. “I shouldn’t have ever been a boss.”

Soon goods were arriving from Walmarts and Targets across the country, bought by sellers as far away as the Philippines. Kristal expanded to her garage, then to an abandoned Ford dealership on Main Street, then to a warehouse last used to pour concrete for fracking wells. She hired ten, then 20 people. But the flow of goods had become a flood. The used books were a particular problem, with all their finicky stickers that needed removing, and thousands were arriving every day. She was working 15-hour days, and customers were complaining about slow turnarounds. “There was no guide to how to do a prep center or anything like that,” Kristal says, sounding exhausted just recalling the memory. “It was basically winging it.”

Kristal wasn’t the only person who, when asked to describe Roundup, went with “gossipy,” which is to say small — a place where everyone knows everyone, for better and for worse. Kristal had hired friends and family to handle the onslaught of packages, and fissures began to emerge. They cracked open one day in 2016. Kristal had hired a friend, Linda McAfee, whose grandson was dating Kristal’s daughter. They broke up, and it was bad. Kristal confronted her friend about it, and it grew heated. Linda says she quit; Kristal says she fired her. “I was never meant to be a boss,” Kristal says. “I shouldn’t have ever been a boss.”

It was this schism that caused prep centers to proliferate in Roundup, because shortly after, Linda went into business for herself. She had moved to the area when her husband got a job in a nearby mine. At 59, she’s both laconic and blunt, someone for whom, in her words, “stuff just flies out of my mouth, I don’t care.” She put up a shingle as MT Prep ‘n’ Ship Pro and started getting deliveries to the shop on her property.

From there, Amazon prepping started to spread through Roundup as fast as a rumor. First, Linda’s neighbor told her another resident, Jill Johnson, had heard about her new gig and wanted to learn the ropes. Linda tried to fend her off, saying she was too busy. But Jill — who’d moved to Roundup from northern Florida after visiting to help her friend herd cattle — was determined. She’d just been laid off from her state job due to budget cuts and needed the work. “Okay, send her in,” Linda told her neighbor, relenting. Jill apprenticed in the shop, and they became fast friends.

Soon Jill needed more space to store all the packages she was getting, so she drove down Roundup Road to the outskirts of Billings to buy a shed. She told the woman selling sheds what she needed it for, and that woman, Chris Redger, thought it sounded like a good side hustle. So Chris made a website called Rolling “R” Prep and Ship and set up a prepping operation in her store’s side room, which is now stacked with inflatable Santas, cans of chili, and leave-in conditioner sent in from Walmarts, Targets, REIs, and Big Lots, all destined for Amazon.

Not long after, it was time for Jill to help a nearby ranch bring cattle down out of the mountains. She would have, at best, limited cell reception: “The first time I felt absolutely alone was up there,” she says, her eyes bright with excitement. “Nobody can hear you scream, nobody can, and you’ve got bears and mountain lions, and you learn to trust your horse.” (Jill loves herding so much she made a photo of the ranch the backdrop of her prep website, Big Sky Prep & Ship.) She needed a house sitter to receive incoming packages while she was away, so she turned to Sandi Green, a bubbly former bank teller who was working from home doing customer service for a financial firm. Jill warned her that she got an unusual number of deliveries, but didn’t say why.

“I had no idea!” Sandi says. Soon, the hundreds of arriving boxes had filled the porch and she was searching for tarps to keep off the rain.

When Jill returned from the mountains, Sandi asked her what her business was. Sandi moved to Roundup to care for her ailing father who had since passed, and she was now living with her mother, who was recently diagnosed with Parkinson’s. Her job let her work from home, but the hours made it hard for her to get away to drive her mom to doctors’ appointments an hour away. She jumped into prepping with chipper efficiency, taking the name Prep N’ Ship 406 and setting up a workspace in her garage with fastidiously arranged bags, tape, and labels.

And so it went. There are now nine women in the preppers’ group chat, soliciting advice and swapping tips on how to best package goods for Amazon. Several more are scheduled to apprentice. Between Selltec and the splinter group, every day Roundup receives 3,000 to 4,000 Amazon-bound packages — about double the number of people who actually live there.

heThe preppers are one part of a vast, informal, and mostly hidden workforce that stocks Amazon’s shelves. The majority of goods sold on the site come from third-party sellers, many of whom got their start going to brick-and-mortar stores looking for products to buy and resell. But the Amazon platform is designed to pit sellers against each other in competition, and as more sellers joined — there are now over 2 million, according to one recent count — margins vanished. Some arbitrageurs adapted by traveling to far-flung stores to find goods, but the emergence of other e-commerce platforms presented another opportunity: sitting at a desk, buying goods online, and sending them to Amazon.

In the last several years, sellers have designed software to scrape sites and find products that can be sold at a profit. Tactical Arbitrage is one of the most widely used. Developed in 2015 by an Australian reality TV producer named Alex Moss who’d started selling on Amazon to fill the gaps between gigs, it automates much of the process. “I wanted to be able to basically point a piece of software at an entire online retail store and have it scour the catalog and compare it against Amazon’s catalog and spit out where the arbitrage opportunities were after Amazon had extracted their fees,” he says.

The missing link was the prep center: someone needed to receive all those deliveries, make sure the products were in good shape, and repackage them according to Amazon’s specifications. Amazon sellers started to recognize the need and set up prep centers in sales-tax-free states like Oregon and Montana.

Prep centers, automated software, and Amazon’s logistics network let arbitrage globalize. Now someone sitting in Ontario or Manilla or Ljubljana can buy a hundred toasters from a Target warehouse in San Bernardino and send them to a prep center in Roundup and on to Amazon, which might automatically divide the toaster shipment between fulfillment centers in, say, Illinois, Kentucky, and Utah based on projected demand, before shipping the toasters to smaller local warehouses and finally out to customers. Many sellers now have about as much relationship to the goods as commodity traders to do pork bellies, just directing goods from one company’s warehouse to another.

I’m basically moving inventory from one warehouse, to my fulfillment center, and then to Amazon to a third fulfillment center, and then to finally being sold to some customer at the end point,” says Chris Grant, a seller based in Orlando who just contracted with a prep center in Montana. “Which when you kind of take a 50,000 foot view of it, it kind of seems really inefficient.”

The women in Roundup are mostly bemused by their role in this system. They did not expect when they came to Roundup to be a way station on a highway of thousands of consumer goods. Jobs here of any sort are hard to come by, much less ones that give them the flexibility to go herd cattle, or care for ailing family, or work from an off-the-grid house miles from town.

Unlike many people who have found a niche feeding Amazon’s viciously competitive marketplace, the prep center women are welcoming to newcomers. Amazon sellers will engage in elaborate sabotage to undercut their rivals in selling $5 socks, but the preppers have as many customers as they can handle anyway, so they’re happy to pass on inquiries to whoever’s new.

“She’s the matriarch,” Sandi says, pointing to Linda, when I meet them and Jill at the Busy Bee Cafe for pie and coffee. Linda groans.

“I call her the leader,” Jill adds. Linda’s wince grows. “She mentored me. And, I asked her, I said, ‘Why would you help me?’ And, she goes, ‘Jill, there’s no competition, there’re so many sellers out there.’”

“Pay it forward,” Linda says.

“I didn’t know about the condoms, Linda”

Each item prepped and shipped nets the women a dollar. If the items are small and the preppers work fast, they can make good

money. Sandi, who tracks her prepping in a spreadsheet on her desk, calculates that she made $49.55 per hour bagging 353 miniature animal toys the day before. Their income drops if they have to prep, say, strollers or televisions, but the work is flexible and still pays better than most of the jobs available in the area.

“The jobs we get here are so close to almost minimum wage,” Linda says. “And it really doesn’t cost a lot to start a prep. I mean, you started with one printer.”

Servicing Amazon sellers is more stable than actually selling on Amazon, and the preppers have seen plenty of new customers go quickly bust. They speak fondly of the ones who have managed to stick it out, talking about who just had a kid, whose business is growing fast, who’s looking to quit their day job. Jill has had clients invite her to visit them in Greece and Slovenia. Linda works with clients in Australia, Canada, and Malaysia. A seller from Philadelphia actually flew out to inspect Linda’s operation — “If you’re expecting a big warehouse with little robots running around, you’re going to be disappointed,” Linda says, laughing, though she admits she considered putting out a Roomba — but such in-person contact is rare.

The sellers are all elsewhere. The preppers are the ones who see the products up close, checking that they’re in good shape and packing them to Amazon’s specifications. All manner of goods pass through their shops.

“Could be food products, clothes, toys,” Jill lists.

“I have, at my age, learned that there are things out there I never knew existed,” Linda says, ominously.

“You wouldn’t believe it, you can get anything on Amazon, you know that,” Jill says.

“My goodness, yes,” Linda agrees.

Like what, I ask.

“Linda, say it,” Jill says, eagerly.

“Say it, Linda” Sandi urges. Linda hesitates.

“The rainbow condoms! The ones that light up. I was like, ‘Oh!’”

It turns out they weren’t thinking of the rainbow light-up condoms at all, but actually some other sex toy. “I didn’t know about the condoms, Linda,” Jill says.

With the shoes, inflatable Santas, and sex toys repackaged, the preppers log onto Amazon, which tells them the fulfillment center to which they’ll send the products. The end result is a bizarre, looping supply chain. Some hair conditioner might get sent from a Walmart warehouse in Grantsville, Utah, to Roundup, then from Roundup to an Amazon fulfillment center in Joliet, Illinois. Finally, Amazon sends it out to a customer.

Or maybe it doesn’t. Maybe another seller buys the item and sends it to another prep center. The preppers are constantly getting packages from Amazon, which they unbox and repackage and send back to Amazon.

This is what’s called an Amazon flip. Sometimes it happens when one seller buys something from another seller who isn’t using Prime shipping, then marks it up and sends it back to Amazon in the hopes that the Prime designation will cause the algorithm to give them better billing. Other times, sellers will buy products from Amazon when the price drops, then send them right back.

Customers, of course, have no idea any of this is happening: they just see the magical efficiency of their inflatable Santa appearing the day after they clicked on it. But the preppers have a better view of the flow of goods, and to them it sometimes seems absurd. “My thought was always, ‘If Amazon knows this person is buying it, why don’t they just add it to their inventory?’” Linda asks. “Instead of shipping it, why not just move it across the warehouse?”

fterAfter coffee, I drive up the road three minutes to Selltec. It’s a much bigger operation: a beige warehouse sitting in a dusty lot, a delivery truck parked out back. It’s dim inside, and Kristal sits at a desk in front of towers of boxes, examining inventory lists displayed on her monitor.

She’s less upbeat about the business. She regrets falling out with Linda, and scaling up has brought new challenges. Right now, she’s barely profitable after leasing the space and paying workers, even just minimum wage. It takes long hours just to keep up with the never-ending stream of goods. Like the others, she’s more concerned with staunching the flow of Amazon-bound products than courting new customers. “We definitely went through our highs and lows,” she says — inventory piling up, customers complaining, working from seven in the morning to nine at night. “We went from having way too many clients to finally shutting off our clients. It was a learning curve, a huge learning curve.”

She thought she’d never fill up the warehouse, and now products are stacked in the loading bay. We walk down an aisle: televisions, biochemistry textbooks, popsicle makers, power drills, Lego sets piled in Toys R Us shopping carts, and many, many pairs of shoes. They’re coming in from Targets, Walmarts, and Barnes and Nobles in Waco, Salt Lake City, Phoenix, and Minneapolis. “It’s amazing how much this stuff travels around the world,” she says.

I ask her if it ever seems strange that all this stuff is just cycling around from warehouse to warehouse.

“It is strange,” she says, as we pass towers of body butter. “And it amazes me, if somebody actually thought about how many warehouses or how many people’s hands touch their product, it would creep them out.”

But no one thinks about that, and why would they? Amazon has designed the sleekest, most efficient consumer gratification interface ever devised: just a click on a screen or a command to Alexa and an item arrives. It’s what allows the whole arbitrage ecosystem to exist, that the ease and speed outweighs the effort of Googling other options, to say nothing of going to a physical store.

“It’s the convenience, 100 percent,” Kristal says. She gets the appeal. There are only two grocers in Roundup, both very small; several shuttered buildings along Main Street appear to be memorials to general stores, with dusty tins in the window and dioramas of settler women in floral dresses.

“We are so rural. You have to drive to Billings to get most things,” she says. So she ends up shopping on Amazon all the time, even just to get dog food. Knowing what she knows, she tries to remember to check the price, but sometimes even she can’t be bothered.