After over-expanding, Amazon plans to lease up to 30 million square feet of warehouse space. report


  • Amazon plans to lease 10 to 30 million square feet of warehouse space, the report said.
  • We are also considering terminating or renegotiating some warehouse leases.
  • The e-commerce giant increased capacity during COVID-19, but now has to deal with over-scaling.

Amazon plans to sublease or renegotiate leases of up to 30 million square feet of warehouse space. wall street journal And Bloomberg. As the economy reopens, it’s the latest sign that over-expansion during the pandemic is biting the e-commerce giant.

Amazon has not yet decided how much space it should give up, the journal reported Monday, citing an unnamed source. However, it is expected to dispose of at least 10 million square feet and could double or triple that amount, the official said. Warehouses in New York, New Jersey, Southern California and Atlanta are likely to be affected, the source told Bloomberg in a report on Sunday.

An Amazon spokesperson told an insider that subleasing “can relieve financial obligations associated with existing buildings that no longer meet our needs. Subleasing is what many established businesses do to help manage their real estate portfolios.” “He said.

Amazon has been building warehouse space and increasing its workforce to meet surging online demand during the pandemic. According to Bloomberg, it will lease 370 million square feet of industrial space by the end of 2021, doubling its 2019 figure.

But as the pandemic recedes and consumers begin to shop less online, e-retailers find themselves now dealing with too much capacity. Insiders reported that the company lost $6 billion in the last quarter due to overcapacity and lost productivity and inflation.

This contributed to the first quarterly loss since 2015. The company announced in a press release in April that it posted a loss of $3.8 billion in the first three months of the year.

As a result, Amazon has scaled back its operations on several fronts. We are adding fewer shipping partners to our network this year and delaying hiring new employees.

Amazon did not immediately respond to questions about whether its plans to reduce warehouse space would affect its current workforce size.

Other online retailers and retail tech companies have also been hit by the downturn as consumers stop surfing online for offline shopping. As the economy reopened, Shopify’s revenue declined. eBay saw the value of goods sold on the platform. Slip 20%; Earlier this month, Etsy’s CFO told CNBC that sales were slowing. report.

However, Amazon remains relatively cautious about eliminating overcapacity in anticipation of a potential rebound.

The amount of warehouse space reported to be sublet is still only a fraction of a total square foot. According to the annual report, a minimum total of 10 million square feet represents approximately 2.6% of the total space leased in North America.

Leave a Comment