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May 15, 2023

Amazon cancels, delays dozens of warehouses as it looks to rightsize capacity

MWPVL's data shows the extent of Amazon's efforts to scale back its warehouse

MWPVL's data shows the extent of Amazon's efforts to scale back its warehouse presence as online sales decline from 2021's pandemic-fueled highs.

Excess capacity and less productive facilities in the past several months have resulted in billions of dollars in added costs for the company. In response, Amazon is slowing down its network expansion through 2023 "to better align with expected customer demand," CFO Brian Olsavsky said on a July earnings call.

Amazon's actions don't target a particular facility type or geographic area. However, the majority of the moves are closures and plan cancellations — totaling 42 U.S. facilities — rather than delays. Four planned facilities in Spain and one facility in Germany have also been canceled.

Amazon is nixing these projects to reduce both capital expenditures and operational costs, Wulfraat said. Facilities that are closing are having their operations consolidated into another nearby warehouse or being put up for sublease.

Amazon spokesperson Maria Boschetti said in an email that the company weighs a variety of factors in deciding where to develop its future sites.

"We have dozens of fulfillment centers, sortation centers and delivery stations under construction and evolving around the world," Boschetti said. "It's common for us to explore multiple locations simultaneously and adjust timetables based on needs across the network."

Amazon is also delaying the opening of 24 facilities slated to open later this year, per MWPVL. Some have had their openings pushed back to as far as 2024. Wulfraat said the company "will pay the lease expense but avoid ramping up additional payroll."

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