Following losses and the additional spend on its fulfilment network, Amazon plans to cancel or delay work on at least 16 of its new warehouses in the US this year.
In the first quarter of 2022, the company reported a US$3.8bn (R61.9bn) loss, compared with a US$8.1bn (R132bn) profit in the same period of 2021. Additionally, the company spent US$6bn (R97.9bn) on its fulfilment network.
According to President and Founder of consulting firm MWPVL, Marc Wulfraat, reduced productivity due to overstaffing accounted for about a third of Amazon’s US$6bn of added costs in Q1.
Modern Shipper has reported that the decline could be attributed to many factors, one of which is the return to in-person shopping following the pandemic. Inflation has been identified as possibly the main factor. With less disposable income, shoppers are trying to save by spending less online and rather putting their money into things like travel and fuel.
Of the 16 new warehouses, four are being cancelled entirely – Salinas, CA; Chamblee, GA; Churchill, PA; and Lawrence, WI. The opening of the warehouse in San Antonio, TX, has been delayed indefinitely, and the plans for the Round Rock, TX, warehouse are on hold indefinitely.
Warehouses that have been delayed until 2023 include Shreveport, LA and Alcoa, TN. Those delayed until 2024 are Davenport, IA; Sioux Falls, ND; and Marriot-Slaterville, UT. The warehouse in Canton, MS, will open later this month on July 18.
