How a tiny Montana town became a major Amazon hub

Kristal Graham in the Selltec prep center in Roundup, Montana. (Photo for The Verge by Josh Dzieza)

Roundup, Montana, has one traffic light and fewer than 2,000 residents. It's the last place you'd imagine as home to a major shipping hub. But every day in Roundup, thousands of packages from major retailers like Walmart and Target, are unboxed, repackaged, and sent out to Amazon customers and shipping hubs. The town 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," John Dzieza reports for The Verge.

It started in 2015 when rancher Kristal Graham began buying goods from other retailers and selling them for a profit on Amazon Marketplace. "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," Dzieza reports. "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."

Roundup, Montana (Wikipedia map)

But Amazon only accepts products if they're packaged a certain way, so resellers must cover up old barcodes and prices and add new ones, or bubble-wrap glass, for instance. "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," Dzieza reports. "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."

Business went so well for Selltec that others in Roundup decided to open up their own prep and ship
businesses. "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," Dzieza reports. "The 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."

There are now more than two million third-party sellers on Amazon competing against each other on price and customer ratings. With profit margins so thin, resellers sometimes go to extreme lengths to compete, including using software that scrapes content from other retail sites to find potentially profitable products, Dzieza reports.

"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," Dzieza reports. "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."