Also, Amazon has ~$69B in long term lease liabilities. That’s about ~3x the combined long term lease liabilities of Walmart and Costco (~$20B combined). Walmart and Costco are the world’s #1 and #3 retailer, Amazon being #2.
From the beginning when Jassy took the job, the problem has always been the cost of the excess warehouse capacity. Once they realized the true demand from this holiday season, they can now rightsize capacity for 2024 and beyond. Until then, they need to tighten the belt. Just like if you realized you swallowed a bigger mortgage than you can handle.
“The last issue relates to our fixed cost leverage. Despite still seeing strong customer demand and expansion of our FBA business, we currently have excess capacity in our fulfillment and transportation network. Capacity decisions are made years in advance, and we made conscious decisions in 2020 and early 2021 to not let space be a constraint on our business.”
- Brian Olsavsky CFO Apr 28, 2022 earnings call