Amazon met a pandemic boom in online shopping by building big. Between 2020 and 2022, the company added more than 200 million square feet of warehouse space, doubling its physical footprint in the United States.
As ecommerce demand slows, Amazon is stuck with "too much space," the company's chief financial officer, Brian Olsavsky, told reporters last month. Amazon's ballooning real estate empire, which had propelled revenue while customers refrained from in-person shopping in the first two years of the pandemic, has now become a headwind. Amazon is seeking to sublet at least 10 million square feet of its warehouse space and renegotiate some warehouse leases, Bloomberg recently reported.
Using data from the Department of Labor, Insider mapped the mammoth growth of Amazon warehouses since 2017. The map, which includes large warehouses like fulfillment centers as well as smaller delivery stations, shows that the ecommerce giant's warehouse expansion has not been spread evenly across the country.
Some swathes of the country, like the American Rockies, have missed out on Amazon warehouse development almost altogether. Population centers and logistics hubs like Southern California, northern Pennsylvania, and Florida, meanwhile, have seen a massive proliferation of Amazon warehouses. All told, the number of Amazon warehouses more than quintupled over five years — to 907 at the end of 2021 from 174 in 2017.
The fivefold growth in the number of Amazon warehouses between 2017 and 2022 has in some cases generated tensions between the company and municipalities and their residents. Community groups in places like California's Inland Empire have protested the gridlock, pollution, and traffic accidents attendant upon warehouse expansion — with Amazon, the nation's largest warehouse employer, often singled out for special attention. The Teamsters union has highlighted those concerns in attempt to derail the placement of new Amazon delivery stations, Bloomberg reported last Tuesday.
Olsavsky estimated during the call last month that Amazon's excess warehouse space cost the company $2 billion last quarter. Over-staffing at Amazon warehouses cost the company another $2 billion, Olsavsky said, while wage inflation cost Amazon another $2 billion in the three months ending last year. All told, shipping and fulfillment costs now account for about 35% of Amazon's operating expenses, up from 28% in 2019, according to quarterly business filings.
Analysts and industry insiders expect that Amazon's overcapacity problem is transitory, Insider previously reported. As online shopping demand grows, they said — albeit at a slower pace than the previous two years — Amazon may be able to make use of its excess warehouse space, possibly by the end of this year.
Work at Amazon? Got a tip? Contact reporter Katherine Long on the encrypted messaging app Signal (+1-206-275-9280) or email (klong@insider.com). Reach out using a non-work device.
