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posted by janrinok on Tuesday July 05 2022, @08:14PM   Printer-friendly

Amazon Cancels Or Delays Plans For At Least 16 Warehouses This Year:

After spending billions doubling the size of its fulfillment network during the pandemic, Amazon finds itself in a perilous position.

In the first quarter of 2022, the e-commerce giant reported a $3.8 billion net loss after raking in an $8.1 billion profit in Q1 2021. That includes $6 billion in added costs — the bulk of which can be traced back to that same fulfillment network.

Amazon (NASDAQ: AMZN) CFO Brian Olsavsky said the company chose to expand its warehouse network based on "the high end of a very volatile demand outlook." So far this year, though, it has shut down or delayed plans for at least 16 scheduled facilities.

"We currently have some excess capacity in the network that we need to grow into," Olsavsky told investors on Amazon's Q1 2022 earnings call. "So, we've brought down our build expectations. Note again that many of the build decisions were made 18 to 24 months ago, so there are limitations on what we can adjust midyear."

[...] If you're wondering how that's possible, consider Amazon's unmatched turnover rate. A New York Times investigation uncovered that even before the pandemic, it was as high as 150%. That means there are more employees leaving Amazon warehouses each year than there are being hired.

[Ed's Comment: AC Friendly withdrawn. You can blame you-know-who for the spamming]

In fact, there has been so much turnover that Amazon began tracking it weekly and found it loses an estimated 3% of its warehouse workers every seven days. That means the e-commerce powerhouse sifts through its entire supply of warehouse labor every eight months on average.

Simply put, the strategy isn't sustainable long term. Still, Wulfraat believes Amazon can weather the storm.

"It will take some time to iron out the wrinkles, but they will get through it," he told Supply Chain Dive.

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  • (Score: 2, Interesting) by Anonymous Coward on Tuesday July 05 2022, @11:46PM (1 child)

    by Anonymous Coward on Tuesday July 05 2022, @11:46PM (#1258408)

    While not announced by Amazon (that I'm aware of), one of their real estate proxies has been looking for land to build one of these giant warehouses near Buffalo/Niagara Falls. The first site that made the news a few years back was on Grand Island, and the residents put up enough of a stink that they gave up. It's not the best place anyway, only access is over toll bridges on N and S ends of the island.

    A few months ago, they made the news when looking at some vacant land next to the Niagara Falls airport. This, to me, seems ideal on many fronts: The airport was originally Bell Field in the town of Wheatfield (where Bell Airacobras were built*) and has a nice long main runway, but it's barely used these days--home to a small Air Guard base, a few charter flights a week and some specialized R&D companies. * []

    Amazon could pretty much take over that airport if they wanted it. Also, the location is next to expressways with bridges to Canada. Finally, Niagara Falls is a hard luck city (away from the tourist areas), even these shit jobs would likely be better than what is currently available in the immediate area.

    But the local Amazon news petered out last month--likely foreshadowing this announcement of a pull back on new building.

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  • (Score: 0) by Anonymous Coward on Wednesday July 06 2022, @02:05AM

    by Anonymous Coward on Wednesday July 06 2022, @02:05AM (#1258435)

    Looks like the fulfillment center being opened near me is still good to go. With any luck I can get drone deliveries within 5 years.