Amazon is set to scale back its ‘oversaturated’ delivery network while cutting back on the number of service partners this year.
The company invested heavily into its delivery network over the course of the pandemic as it attempted to capitalise on an increased consumer demand.
Brian Olsavsky, Amazon CFO, announced the company expanded too much, too fast by constructing warehouses and hiring personnel beyond its needs.
However, a grim financial outlook amid rising inflation has prompted the company to reconsider its plans going forward.
This has meant it will significantly curb the growth of its third-party delivery partners this year after it has been left with excess logistics capacity.
The ecommerce giant expects to add 451 partners this year, a 33% fall from last year’s 670 new launches, according to Business Insider.
This year’s projection would be less than half of the 1,191 new partners it signed up during the peak of the pandemic in 2020, leaked documents revealed.
Amazon is now switching its focus on improving the quality of its partners, with several new initiatives planned for this year, the documents show.
The move follows a number of press reports that scrutinised the partner program’s flaws, which ranged from false suspensions, financial difficulties, and insufficient safety precautions.
“With less demand on candidate volume, the team pivoted the strategy to improving candidate quality,” one of the planning documents for this year said.