Amazon will take years to recover from a warehouse overbuilding binge during the pandemic. In 2022, it still added a third of Walmart's total capacity.

• Amazon saved up to $4 billion in 2022 by canceling or delaying warehouse openings, Wulfraat says.
• The company scaled back warehouse expansion last year in the face of an economic downturn.

It could take Amazon 3 years to recover from a pandemic-era warehouse expansion binge that left the e-commerce giant with too much space, according to new estimates from renowned consulting firm MWPVL International. A spokesperson for Amazon called this story "pure fiction."

In 2022, Amazon grew its warehouse footprint by 52 million square feet, less than half the capacity it added in each of the two previous years, MWPVL President Marc Wulfraat said in a recent call with brokerage firm Evercore. Amazon grew its warehouse footprint by 125 million square feet in 2020 and 137 million square feet in 2021, Wulfraat estimated.

The pullback last year came in response to a slowdown in growth and a deteriorating global economy. Amazon delayed or canceled certain warehouse openings, while shutting down a number of projects and downsizing its total workforce. On Wednesday, the company announced 18,000 job cuts.

Complimentary Tech Event

Transform talent with learning that works

Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

Despite the slowdown, Amazon's warehouse growth last year was still big relative to Walmart, whose total US warehouse footprint is estimated to be roughly 150 million square feet, Wulfraat said. In other words, Amazon's new warehouse space from last year alone was roughly a third of what Walmart has added throughout its entire history.

"Amazon now has approx. 578MM sq ft. in the U.S. and 834MM worldwide. That's a LOT!" Evercore analysts wrote in a note Wednesday after their discussion with Wulfraat.

Amazon currently uses about 65% of its total warehouse capacity, lower than the 85% levels from 2019, Wulfraat estimated. That's because Amazon over-expanded in recent years, with warehouse growth "materially" outpacing product sales growth, he said. It will need 2 to 3 more years to reach the 2019 capacity utilization levels, Wulfraat estimated.

'Pure fiction'

MWPVL, founded in 2006, specializes in supply chain, logistics and distribution, and works with retailers, wholesalers, distributors and manufacturers. The firm has been tracking Amazon's warehouse network for at least a decade, and Wulfraat has been tapped for his expertise for years by Wall Street analysts, industry players, and the media.

"This data is categorically incorrect and if Business Insider chooses to go forward with an article based on this data then the article is pure fiction," Lisa Levandowski, an Amazon spokesperson, said in an emailed statement. A spokesperson for Walmart didn't respond to a request for comment.

The company saved up to $4 billion last year when it scaled back warehouse expansion plans, according to Wulfraat.

Longer term, Wulfraat pointed to four factors that could help improve Amazon's growth or profitability: Broader use of warehouse automation, like robotic picking arms; faster delivery; growth of its logistics business, including Buy with Prime and other fulfillment services; and international expansion.

Do you work at Amazon? Got a tip?

Contact the reporter Eugene Kim via the encrypted messaging apps Signal or Telegram (+1-650-942-3061) or email (ekim@insider.com).