Amazon Scales Back Warehouse Portfolio — Again
Amazon’s slash-and-burn cost-cutting strategy has carried into 2023 with more warehouse closures ahead, according to one industry analysis.
Since announcing 66 impacted facilities in September, the e-commerce giant has now canceled, closed or delayed another 33 warehouses, bringing the total to 99, according to new data from MWPVL International reported by Supply Chain Dive.
In total, the cuts comprise 32.3M SF of active or ground-level space in 30 states. Fulfillment centers and delivery stations are most affected, per Supply Chain Dive.
Early in the pandemic, Amazon invested billions of dollars into building and leasing millions of square feet of warehouse space. Once businesses reopened and outsized demand for e-commerce subsided, the company began slimming down its portfolio in a bid to strengthen profitability.
MWPVL President Marc Wulfraat predicted earlier this year that Amazon’s aggressive push into up-and-coming Tier 2 markets would be delayed and that 12 future fulfillment centers totaling 10M SF would likely not open due to excess capacity in the company’s existing network.
“We think that Amazon will likely need to wait out 2023-2024 in terms of new facility expansion, with the exception being certain geographic markets where capacity is still at a shortfall,” Wulfraat told Bisnow in a Jan. 6 email.
Amazon has repeatedly denied the accuracy of MWPVL’s findings, and this time is no different. Spokesman Steve Kelly accused the firm of including buildings and land in its data that the company is either keeping or never had in its possession.
“Of course, as we’ve always done, we evaluate our network to make sure it fits our business needs and to improve the experience for our employees, customers, partners and drivers,” Kelly told Supply Chain Dive. “We may close or delay facilities, enhance existing facilities or open new facilities, and we weigh a variety of factors when deciding where to develop future sites or maintain a presence.”
In a previous email to Bisnow, Wulfraat said the rejection of his data is to be expected given it is Amazon’s “job to promote good news and to repudiate bad news.”
Amazon is sticking with plans to open another 231 facilities comprising more than 82M SF. More than half of those buildings are slated to be delivery centers, according to Supply Chain Dive.
It remains unclear what will happen to those buildings once they open, Wulfraat said, pointing to scenarios in which Amazon immediately put a new delivery station on the sublease market.
