08

Jul

Amazon is suddenly finding itself in an unfavorable position: six new distribution centers have been canceled, eight have been delayed, and two have been delayed “indefinitely”. This news comes shortly after the e-commerce giant announced plans for doubling their fulfillment network, costing billions of dollars in the process. According to the U.S. Census Bureau, American e-retail sales in Q1 of 2022 grew 2.4%, compared to the final quarter of 2021. While this data would imply that online stores like Amazon are thriving, e-commerce sales as a percentage of total retail sales declined on an adjusted quarter-over-quarter basis. Inflation is suspected to be the main culprit behind these sudden decreases; less disposable income and higher price tags means that consumers are saving their money and spending it on necessities like gas and groceries. Another considerable factor is a rebound for brick and mortar stores. As Covid fears are waning, consumers are finding a renewed sense of excitement for in-person shopping experiences. Even with a pullback, Amazon boasts a fulfillment footprint no other company can rival. For Amazon, the issue isn’t warehouse or fulfillment center space, but in the warehouses themselves. An article published by Modern Shipper explores the real threat to Amazon’s business.

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