Pardes episode 1
Since 2017, third-party sales have made up half or more of all sales. Large parts of the storage space owned by Amazon is devoted to its own listings, but in recent years the company has also ramped up FBA. That number more than doubled during the course of the pandemic as physical stores closed and online shopping became predominant. The company has around 500 million square feet of warehouse space in the United States and United Kingdom, according to Mofid-90 percent of it in the US. Nor is it possible to know what proportion of Amazon’s warehouse portfolio is lying empty at present.
#Pardes episode 1 full#
“It’s more likely that they just won’t be running at full capacity.” “I don’t think you’d be saying: ‘This warehouse is empty and that one isn’t,’” he says. It’s impossible to know where the unused warehouse space lies, says Mofid. In 2019, shipping and fulfillment costs were responsible for 28 percent of Amazon’s operating expenses. Amazon overcommitted to warehouse space during the pandemic, expecting continued strong growth for its online retail platform, which didn’t materialize. In a low-margin sector, the demise of sellers during the pandemic has impacted Amazon too.
You really have to be running a tight ship.” And for the rest of us, you just need to be more and more efficient. “A lot of people sell their business, or get eliminated altogether. “That gap is getting more and more narrow,” says Walker. Walker points to Amazon’s business model, which requires more new sellers to repeatedly come into the space, driving prices down for customers at the same time as fees go up. “The costs are only going in one direction.” At the same time, business is getting more challenging for FBA sellers. “I can totally see how people would say it’s kind of like a frog in boiling water,” says Walker. These conditions dissuade most businesses from trying to chance their luck going it alone-or with a competitor-and instead they swallow the price hikes. (On the coasts, vacancy rates of less than 2 percent are not uncommon.) “The market is so tight at the moment that anyone, not just Amazon, is having to think strategically about how much space they need, and how much they might need in the future,” Mofid says. In the US, the vacancy rate is 4.4 percent, he says, with variations depending on the market.
The warehouse vacancy rate in the UK is 2.8 percent-the lowest it’s ever been, according to Kevin Mofid, head of industrial and logistics research across Europe, the Middle East, and Africa for the real estate firm Savills, and a specialist in warehouses. The alternative is for sellers to build their own or rent space in independent warehouses-challenging enough at any point, never mind at a time when the market is squeezed.
Beginning May 12, we will implement a fuel and inflation surcharge of 4.3 percent on top of our current FBA fee per-unit rates in the UK, Germany, France, Italy, and Spain.” Wickham denied there was a connection between fee rises and Amazon’s spare warehouse space. “It’s still unclear if these inflationary costs will go up or down, or for how long they will persist. “In 2022, we expected a return to normalcy as Covid-19 restrictions around the world eased, but fuel prices and inflation have presented further challenges,” says Amazon spokesperson Dagmar Wickham. “For a minimum amount of money, you can scale a business with almost no infrastructure.” “It’s an awesome scaling program,” he says. The business is in the top three of the biggest child-focused arts-and-crafts brands on Amazon in the UK, and amongst the top in the United States and Canada. “We’re almost exclusively through Amazon, something like 90-plus percent,” he says. (Walker asked WIRED not to disclose the name of his business because successful businesses on the site are often attacked by competitors who report fictitious issues to Amazon to try to decrease their standing online.) The 42-year-old’s toy business, which designs and manufactures toys and craft materials in China and then sells into English-speaking markets including the UK, US, and Canada, has been running on Amazon’s third-party fulfillment service, Fulfilled by Amazon (FBA), since 2016. In Suzhou, China, online toy shop owner Cameron Walker relies on Amazon to ship nearly a million packages for his business every year.