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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[Ed's Comment: AC Friendly withdrawn.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) by PiMuNu on Thursday July 07 2022, @09:53AM

    by PiMuNu (3823) on Thursday July 07 2022, @09:53AM (#1258661)

    Typically in a work force there are a core of folks who stay in the same job and then a bunch of folks who move on every so often. Could well be that 90 % of the work force stay in role and then 10% work are occasional workers who move through Amazon and then move on to other jobs. Quite likely this is the way, and for low pay low training stuff like warehouse operative I imagine this is typical.

    The statistic is meaningless without more information, e.g. a comparison to other employers in the same sector. What is the turnover like at DHL? Or some generic logistics outfit?

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