Retail giant Amazon developed so much industrial space and hired so many people in response to pandemic-era demand for goods sold online that the company now has an excess in both that is affecting its bottom line, the company’s chief financial officer said during the e-commerce giant’s first-quarter earnings call on Thursday.
“We currently have excess capacity in our fulfillment and transportation network,” Amazon CFO Brian Olsavsky said during the call, adding that during Q1 2022, the company “quickly transitioned from being understaffed to being overstaffed.”
Demand for warehouse space surged during the pandemic as more people shopped online.
“During the pandemic, we were facing not only unprecedented demand but also extended lead times on new capacity,” Olsavsky said. “And we built towards the high end of a very volatile demand outlook.”
He estimated that this overcapacity, combined with the extraordinary leverage the company experienced during the first quarter of 2021, resulted in $2B of additional costs year-over-year in Q1 2022.
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