Amazon Abandons Its Big Project

( Amazon is cutting back quite substantially, announcing recently that they would either close or cancel the development of more than 40 warehouses throughout the country.

According to a recent report from Bloomberg, those facility closures represent nearly 25 million square feet of commercial real estate space.

During the height of the pandemic, Amazon expanded their warehousing operations significantly to keep up with the increased demand from consumers who were staying at home and having everything shipped to them. Now that the pandemic has eased and people have returned to stores, the company is apparently implementing some cost-cutting measures.

Andy Jassy, the CEO of Amazon, is developing a strategy that will cut not only the surplus in warehouses that he believes the company has, but also a surplus of employees who were working at those facilities.

Bloomberg’s report showed that Amazon was once building nearly one new warehouse almost every day during the height of the pandemic. Since that time, it has either delayed or fully closed a total of 60 warehouses, and slashed 100,000 jobs in the process.

For their report, Bloomberg cited data that was provided to them by MWPVL, which is a consulting firm in the supply chain industry. The founder and president of that firm, Marc Wulfraat, submitted a statement to the media outlet that read:

“There remains some serious cutting to do before year-end — in North American and the rest of the world. Having said this, they (Amazon) continue to go live with new facilities this year at an astonishing pace.”

Many retailers, both big and small, are struggling recently and have been forced to cut back to stay afloat. Publicly-traded retail companies have cut their estimates for earnings recently as inflation is still at a record-high level and hasn’t come down much yet.

Last week, Amazon announced it would shutter two different delivery stations that are located close to Baltimore and employed more than 300 workers. Bloomberg reported that Amazon said those workers would have the ability to transfer to some of the company’s other facilities.

In most years, Amazon opens new facilities and hires new workers in preparation of an upcoming holiday shopping season. To that point, a spokesperson for Amazon told Bloomberg that it wasn’t unusual for them to look at multiple options for locations and then change plans “based on needs across the network.”

The Baltimore facility closures, according to the spokesperson, were being done to modernize the company’s warehouses. One of those big new initiatives is what it’s called the Amazon Warehousing and Distribution service, or AWD. This allows suppliers to store their inventory in Amazon’s massive warehousing capabilities.

In a statement about the program, Amazon said last week:

“Amazon Warehousing & Distribution (AWD) addresses critical supply chain challenges and helps sellers grow and manage their business while significantly cutting costs. With this simple pay-as-you-go service, sellers are free from the time-consuming, cumbersome process of moving inventory from upstream facilities to Amazon fulfillment centers.

“AWD makes the promise of supply chain as a service a reality and is specifically designed to solve inventory management challenges and deliver operational efficiencies.”