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On May 12, Amazon announced that it would shrink its over-saturated logistics network this year and cut the number of third-party service partners.
BrianOlsavsky, amazon’s chief financial officer, said the company had greatly expanded its distribution network during the pandemic by building warehouses and hiring more people than it needed.
However, huge cost pressures amid rising inflation have prompted Amazon to reconsider its future plans. That means it will cut back sharply on the growth of its third-party distribution partners this year amid excess logistics capacity.
According to Business Insider, Amazon expects to add 451 partners this year, down 33% from the 670 new partners it launched last year. In addition, amazon’s number of third-party partners this year will be less than half the 1,191 new partners it had at its peak in 2020.
Amazon is now shifting its focus to improving the quality of its partners, the documents show. The reports scrutinized flaws in the partners’ programs, including fake suspensions, financial difficulties and inadequate security precautions.
“As the need for the number of logistics partners decreased, the team shifted its strategy to improving partner quality,” an Amazon planning document said this year.
