FBA warehouses are suspended! Amazon officially announced a reduction in the number of warehouses

Two days ago, Amazon held its first shareholders meeting of the year and officially announced the policy of reducing the number of FBA warehouses and the size of the workforce !

As this was the first shareholders' meeting after my brother-in-law resigned and new CEO Andy took office, I will not emphasize how important Andy's speech was at the meeting. The main issue he talked about can be summarized in two words: "cost" .

Andy first interpreted and reported on the Q1 financial report released at the end of April. Amazon did encounter serious cost problems at the beginning of this year. Under the influence of inflation, rising interest rates and the Ukrainian war, Amazon's FBA logistics costs have skyrocketed. In addition, due to changes in consumer habits, the increase in online sales can no longer cover the logistics costs. Andy frankly said that a structural change is imminent.

According to Andy's speech, Amazon has prepared a complete and detailed cost structure control plan, including reducing transportation costs of various channels, optimizing warehouse space and the number of front-line workers, postponing the construction of warehouses and not renewing some expired warehouses, etc. Andy said that he would get back on track and restore healthy profitability within two years.

Andy didn't elaborate on how many warehouses and workers would be laid off under this plan, and we dare not imagine it. We only know that when Amazon held a meeting, it announced that it would abandon two warehouses in Texas and Iowa.

This warehouse project in Texas is a large warehouse that has cost $250 million to invest and covers an area of ​​approximately 193 acres of land. It is a new warehouse that is about to be put into use and has already recruited people. Foreign media revealed that at least 11,000 local workers have subsequent work problems due to the indefinite suspension of the warehouse.

In addition to the warehouse in Texas being shelved indefinitely, Amazon also has a warehouse in Iowa whose opening has been postponed. The FBA logistics center, which was originally scheduled to open this spring, has been postponed to 2024. According to Amazon, there is no guarantee that it will actually open at that time. It is estimated that the situation will be similar to that of the warehouse in Texas. Newly built warehouses that have not yet been put into use will be frozen and not used to reduce costs . The decision on whether to open will be based on the logistics situation.

Recently, there are more and more news about Amazon tightening its belt, which reminds me of the fact that my brother-in-law stepped down and Andy took over last year. It was really a good timing. It seems that Andy came to put out the fire and take the blame. My brother-in-law chose to step down at the most glorious time of Amazon and make a good name for himself. Later, Andy had to bear the blame for the massive layoffs and warehouse closures . My brother-in-law is really shrewd.

What we sellers need to worry about now is that Amazon has already put the reduction of the FBA system on the agenda. Will our storage fees, logistics fees, and transportation time be affected? In addition, Amazon is prone to warehouse overflow and delivery delays during big sales. Now that the number of employees and warehouses have been reduced, can the transportation capacity still meet the demand? We can get some conclusions about these issues on this year's Prime Day. This Prime Day is not only a big test for us third-party sellers, but also for Amazon.