Amazon’s expansion plans have faltered with multiple distribution centers canceled or delayed. Despite a 2.4% Q1 growth in U.S. e-retail sales, Amazon faces challenges from inflation and a brick-and-mortar resurgence. The company’s real issue lies in warehouse operations, not space.
Amazon’s ambitious expansion plans have hit a snag, with six new distribution centers being canceled, eight delayed, and two postponed “indefinitely.” This unexpected turn of events follows the e-commerce giant’s recent announcement to double their fulfillment network at a cost of billions.
The latest data from the U.S. Census Bureau showed a 2.4% growth in American e-retail sales for Q1 of 2022, compared to the final quarter of 2021. While this might suggest that online retailers like Amazon are flourishing, the reality is more complex. E-commerce sales, as a percentage of total retail sales, declined on an adjusted quarter-over-quarter basis.
Inflation is suspected to be a major factor in these declines, leading to less disposable income and higher prices. Consequently, consumers are focusing their spending on essentials like gas and groceries. Additionally, a resurgence in brick and mortar stores, driven by diminishing Covid fears, has contributed to a renewed enthusiasm for in-person shopping.
Despite these challenges, Amazon continues to have a fulfillment footprint unmatched by any other company. The real issue for Amazon isn’t the space in warehouses or fulfillment centers, but concerns within the warehouses themselves. Modern Shipper has published an article that delves into the real threats facing Amazon’s business, providing further insights into the current landscape.
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