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The genius strategy behind Amazon's HQ2 search

Amazon last year announced it would effectively crowd source its search for a location to build a $5 billion second h...

Posted: Feb 2, 2018 3:00 PM
Updated: Feb 2, 2018 3:00 PM

Amazon last year announced it would effectively crowd source its search for a location to build a $5 billion second headquarters. Cities across North America mobilized. They submitted splashy campaigns, assembled thick proposals and outlined big financial incentives to try to catch Amazon's eye.

The company has winnowed the field to 20. Now, while all eyes are on which city will win, there's another dynamic at play.

Through the search process, Amazon has gained valuable data about the 238 metro areas that submitted bids, such as details about their labor force, quality of life, access to mass transit, and the availability of local incentives like tax breaks.

That data could help Amazon, which is rapidly and continually evolving beyond its roots as an online reseller of books, when it's deciding where to locate future sites.

The benefits flowed both ways: Amazon got a trove of information about potential future locations of warehouses, fulfillment centers and research and development offices. And dozens of cities got on the radar of one of America's most innovative and expansive companies.

"Even if cities don't win [HQ2], it's a good thing to be in front of Amazon management to convince them about the strengths of their city. This is not the last major location decision that Amazon will be making," said Ravi Madhavan, a professor at University of Pittsburgh's business school.

Related: The city Amazon picks will change forever

A bid by Kansas City, Missouri, didn't make the final 20 cut. But its proposal highlighting a local alliance that helps veterans get hired after leaving the military piqued Amazon's interest, according to a person familiar with the HQ2 bids. Amazon, which has pledged to hire 25,000 veterans and military spouses by 2021, might consider the city for an investment down the line, the person said.

Kansas City's STEM education program for preschool to 12th graders also indicates it could have a pipeline of strong technical talent in the coming years.

New Orleans' application also caught Amazon's attention. The city has a program that connects businesses and universities to make sure what's being taught in the classroom reflects business needs, the source said.

Amazon itself has said the metro areas that were not selected could be contenders for another facility.

"Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation," Holly Sullivan of Amazon Public Policy previously said in a statement.

The Amazon team behind the second headquarters search includes employees from a variety of departments, including HR, data analytics and real estate.

Related: What you need to know about Amazon's 20 final cities

The HQ2 search process highlighted some metro areas that previously weren't on Amazon's radar.

"For some communities, it may position them to be a candidate for certain projects when maybe they wouldn't have been otherwise," said Mark Sweeney, senior principal with McCallum Sweeney Consulting, which provides site selection services and economic development consulting to companies.

However, Sweeney cautioned that a warehouse is not the same as a massive second headquarters employing as many as 50,000 people.

"The [HQ2] package and offering is not going to be immediately transferable to other projects," Sweeney said.

For example, cities may not be as willing to offer the same incentives for a smaller facility. Additionally, proposed real estate sites may no longer be available in a few years.

But the HQ2 proposals could still give Amazon an edge in future negotiations with that community, since the company has some knowledge of existing incentive programs, he said.

Related: Why you want Amazon to be your new neighbor

The contest-like search process also has another benefit for Amazon and many of the cities: a lot of good publicity.

"This was a strategic move by Amazon," said Michael Lenox, a professor and senior associate dean of the University of Virginia's Darden School of Business. "By knowing how attractive the second headquarters would be for communities and putting it out for competitive bids, they've encouraged so much interest and effort on their behalf from all of these municipalities."

Cities have also received a lot of attention due to HQ2. For example, Birmingham, Alabama made headlines when it installed several massive Amazon delivery boxes around the city. Kansas City's Mayor Sly James wrote five-star reviews for 1,000 random items on Amazon's website. Tuscon, Arizona, sent Amazon CEO Jeff Bezos a giant cactus.

Amazon has added to the buzz by being coy about next steps in the process. It's unclear if Amazon will release an even smaller list before announcing the winning city.

The 20 metro areas still in the running include Atlanta, Austin, Los Angeles, New York City, Newark, Northern Virginia and Washington, D.C. Amazon will make a decision this year.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 331863

Reported Deaths: 7494
CountyCasesDeaths
DeSoto22855279
Hinds22625437
Harrison19462326
Rankin14765286
Jackson14233251
Madison10658227
Lee10398178
Jones8713169
Forrest8164157
Lauderdale7528243
Lowndes6761150
Lamar665988
Lafayette6446124
Washington5497139
Bolivar4907134
Pearl River4889149
Oktibbeha476898
Panola4719112
Marshall4648106
Warren4612125
Pontotoc438873
Monroe4243137
Union424379
Neshoba4179180
Lincoln4088115
Hancock402788
Leflore3562125
Pike3511111
Tate348988
Alcorn343174
Sunflower342293
Adams331987
Yazoo330573
Scott330175
Simpson313690
Copiah311467
Itawamba309580
Coahoma308285
Tippah298368
Prentiss292563
Covington280183
Marion278980
Leake277975
Wayne269942
Grenada265688
George259851
Newton256064
Tishomingo235769
Winston235084
Jasper225748
Attala220373
Chickasaw215960
Stone209137
Holmes194974
Clay191554
Tallahatchie181542
Clarke181480
Calhoun177332
Smith175334
Yalobusha169240
Walthall140448
Lawrence137026
Greene134934
Amite131843
Noxubee131135
Perry130838
Montgomery130644
Carroll124531
Webster116732
Jefferson Davis112934
Tunica110827
Benton104425
Claiborne104231
Kemper100329
Humphreys99033
Franklin85923
Quitman83519
Choctaw80919
Wilkinson73232
Jefferson69028
Sharkey51518
Issaquena1696
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Alabama Coronavirus Cases

Cases: 565510

Reported Deaths: 11468
CountyCasesDeaths
Jefferson828061584
Mobile44938853
Madison36534532
Tuscaloosa26589465
Shelby26409255
Montgomery25598623
Baldwin23319324
Lee16691179
Calhoun15030332
Morgan14877288
Etowah14563368
Marshall12723235
Houston11302292
Elmore10576217
St. Clair10449251
Limestone10420158
Cullman10198204
Lauderdale9883253
DeKalb9226191
Talladega8705187
Walker7545286
Autauga7388113
Jackson7216117
Blount7147139
Colbert6522142
Coffee5962131
Dale5224117
Russell463942
Chilton4603117
Covington4502125
Franklin439781
Tallapoosa4343156
Escambia414782
Chambers3813124
Dallas3674163
Clarke361562
Marion3354106
Pike323179
Lawrence3176101
Winston289672
Bibb276165
Geneva267383
Marengo257367
Barbour241860
Pickens238862
Butler233571
Hale230578
Fayette223863
Henry203345
Cherokee192347
Randolph192244
Monroe190241
Washington174539
Macon167252
Crenshaw163457
Clay161859
Cleburne158445
Lamar149138
Lowndes143854
Wilcox128431
Bullock125342
Conecuh117730
Coosa115229
Perry109628
Sumter107532
Greene95935
Choctaw63125
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