Cutting excess inventory and subletting large warehouses! What signal is Amazon sending?

It is learned that according to foreign media reports, Amazon held its annual shareholders' meeting on May 25th local time. The new CEO Andy Jassy attended the meeting. This was his first time attending the shareholders' meeting since he replaced Bezos as Amazon CEO in July last year.

"We have effectively reduced our cost structure and I am very confident that we can get back on track after these two unusual years," Jassy told shareholders at the meeting.

2022 is a year full of ups and downs for Amazon. The global epidemic and the war between Russia and Ukraine have made the supply chain tense. Coupled with inflation, overstocking and other reasons, Amazon suffered billions of dollars in losses in the first quarter. Jassy took over Amazon during such a turbulent period. He claimed that Amazon will focus on returning to a " healthy level of profitability ."

So what will Amazon do to get back to its previous levels?

In the past two years, in order to meet logistics needs, Amazon has doubled the warehouse area built in the past 25 years. However, the platform's retail sales have grown slowly this year, and the actual utilization rate is insufficient, so the huge warehouse area has become a burden for Amazon.

Jassy said at the shareholders' meeting that management is taking a series of measures. For markets that do not need expansion, the company will suspend warehouse construction plans, sublease some excess warehouses, and will not renew leases in some places after the lease period expires.

It is learned that Amazon will sublease at least 10 million square feet of warehouse space .

2. Increase delivery costs and transfer losses

On April 28, Amazon announced that it would add a 5% fuel and inflation surcharge to the delivery fees of third-party sellers in the United States. Combined with the increase in delivery rates in February, FBA prices have increased twice in less than half a year .