Too many warehouses may have led to Amazon's net loss -analysts
STORY: After spending billions of dollars on new warehouses - a move that cut into profits - analysts say Amazon may have built too much, too fast.
The world's largest online retailer on Thursday reported $2 billion in incremental costs from having excess fulfillment and transportation capacity -- a dramatic shift from just two years ago when Amazon had to turn away merchants' goods, saying it only had room for vital supplies.
Amazon's CFO said the company will spend less on fulfillment projects this year than last, while transportation investments will be flat to slightly down. He said the company appeared to be "overbuilt for current demand," but that Amazon had no regrets.
Analysts said Amazon may have gotten a little ahead of themselves, but they expect the company to grow into the excess space.
The new reality began to emerge halfway through 2021. Amazon was on track to double its warehouse and delivery network, to meet the at-home shopping demand during the health crisis.
But after the Christmas holiday, online sales dipped. Once the Omicron wave subsided, brick and mortar stores beckoned shoppers once again.
And with fuel prices rising, shoppers faced a choice between buying goods and filling their cars with high-priced gas.
Operating income fell 59% to $3.7 billion in the first quarter, while a decline in Amazon's shares in electric vehicle maker Rivian resulted in the company's first net loss since 2015.
