While shoppers were locked inside during the pandemic, Amazon’s warehouses popped up across the country, but now that sales have slowed, those warehouses are closing.
Key Details
- Last year, Amazon began scaling back its ongoing warehouse expansion. By delaying or canceling warehouse openings, the company saved nearly $4 billion, Business Insider reports.
- Even with the cutbacks, Amazon’s capacity increased in just the last year, equaling about one-third of Walmart’s capacity.
- In 2022 alone, Amazon increased its warehouse footprint by nearly 52 million square feet. While still a significant expansion, this is significantly less than in previous years.
- In 2021, Amazon’s warehouses increased by 137 million square feet.
Why it’s news
Amazon’s explosive growth could leave the company floundering, according to experts at supply chain consulting company MWPVL International. The firm suggests that it will take nearly three years for Amazon to recover from such rapid expansion. Amazon disagreed with this assessment.
The drop off in warehouse expansions began last year as economic uncertainty cut into consumer spending. Amazon began shutting down or canceling warehouse expansions and announced employee layoffs. This week, Amazon CEO Andy Jassy announced 18,000 workers will be laid off.
Even with this slowdown, Amazon’s growth is still rapid compared to other giants like Walmart. Walmart’s total warehouse capacity is estimated at around 150 million square feet.
Amazon’s rapid expansion has left many empty warehouses, however. The company uses approximately 65% of its total capacity. That’s lower than the estimated 85% used in 2019, MWPVL experts say. The consulting firm believes it will take Amazon another two to three years before it reaches the capacity of 2018.
Notable quotes
According to Business Insider, an Amazon spokesman strongly disagreed with MWPVL’s projections. The consulting firm has been monitoring Amazon’s network for nearly 16 years.
“This data is categorically incorrect and if Business Insider chooses to go forward with an article based on this data then the article is pure fiction,” Amazon’s Lisa Levandowski told Business Insider.