Amazon wants to terminate multiple warehouse leases due to severe overstocking

According to foreign media reports, as the online shopping boom driven by the epidemic gradually subsides, Amazon is beginning to face the problem of excessive warehouse capacity, so it is considering subletting more than 10 million square feet of space, and may even terminate the lease.

It is reported that Amazon's current warehouses with excess storage capacity are located in New York, New Jersey, Southern California and Atlanta, and the excess space may be far more than 10 million square feet, or even three times that number, but the final assessment number has not yet been determined.

At the end of 2021, Amazon leased 370 million square feet of industrial space in its home market, double what it had two years ago. But in Amazon's April earnings report , these excess spaces will come with an additional cost of $10 billion.

Due to inflation and supply chain issues, the online retail market fell into a downturn in the first quarter of this year, and many e-commerce platforms reported poor first-quarter financial performance. Among them, online retail giant Amazon's revenue in the first quarter of this year was in a loss state.

Since the outbreak of the epidemic, Amazon's online retail pace has continued to increase, firmly sitting on the top spot in the global online retail market. From 2020 to 2022, in order to adapt to the needs of the global online market, Amazon continued to expand and established large-scale logistics and distribution centers in various places to speed up the delivery of goods. According to statistics, Amazon's logistics and distribution centers have provided hundreds of thousands of jobs.

In the second half of 2021 alone , Amazon added 270,000 jobs. But by 2022, due to the pessimistic online market conditions, Amazon encountered a crisis of overcapacity in labor. Overcapacity in labor increased Amazon's labor costs, thereby reducing the company's profits.

Amazon Chief Financial Officer Brian Olsavsky said the reduced productivity cost Amazon about $2 billion , resulting in a net loss of $3.8 billion in the first quarter , the first quarterly loss since 2015.

In order to reduce losses, Amazon has to focus more on sellers and buyers.

Starting from April 28, Amazon US will charge a 5% fuel and inflation surcharge to third-party sellers using Amazon Logistics (FBA) to alleviate the cost surge caused by rising oil prices and inflation.

According to statistics, about 90% of Amazon sellers use FBA. If the cost of each express delivery increases by 5%, Amazon can greatly increase its profit margin and make up for its previous losses.

In addition, in February 2022, Amazon announced that it would increase the price of Prime membership in the United States from US$119 to US$139, the first increase since 2018, an increase of 10%.

Due to the decline in purchasing power caused by inflation, the development of the online sales market has shown a weak state, but in the long run, the development of this market is still unstoppable.

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