A few weeks ago, Amazon announced its decision to shed up to 30 million square feet of warehouse space from its fulfillment network through subletting or renegotiating leases.
It’s safe to say that my jaw metaphorically hit the floor when I first read the news. When I started working with Amazon there were fifteen fulfillment centers in North America. Five years later when I moved on, there were 100, and that was in 2015.
The Northeast United States was one of the quickest areas to embrace E-Commerce retail and was the fastest growing segment for several of the industry’s formative years. During that time, the running joke at Amazon was that if we could build a facility that ran straight through from Delaware to New Hampshire, we would. So to see that New York and New Jersey are two of the locations impacted by this decision truly blows my mind.
Does this signal the fall of Amazon? Hardly. It’s well known that the retail and fulfillment aspect of Amazon, while the initial premise of Bezos’ vision, quickly evolved into the R&D funding mechanism of Amazon Digital, the true profit center for the company. Factor in that E-Commerce is forecasted to continue to grow more than 12% this year and this is really nothing more than a minor blow to Amazon’s ego, as opposed to anything else.
Let me know your thoughts from hearing this announcement and stay tuned for our next post, where I plan to dig into whether or not you should consider subletting some of Amazon’s access space to start your own dropship and fulfillment operation.