Disruption Report #62 – Amazon Increasing Third-Party Seller Fees, Walmart Canceling Billions of Dollars in Orders, and Warehouse Space Availability at Record Low

Walmart Canceling Orders

Walmart is canceling billions of dollars in orders. It is an attempt to get
its inventory under control. It seems that Walmart not only got caught with
excess inventory due to the supply chain debacle but is also being impacted by
consumers who are cutting back due to inflation.

It seems that customers are going back to basics and forgoing purchases of technology and entertainment products that were popular just a year ago. As Freightwaves puts it in their article, “Walmart cancels billions of dollars in orders to right-size inventory levels:”

Walmart Inc. said Tuesday that it has canceled billions of dollars in orders as part of a continued effort to align inventory levels with projected demand and to reduce its exposure to certain products that have fallen out of favor with budget-conscious consumers.

“Walmart cancels billions of dollars in orders to right-size inventory levels,” Mark solomon, freightwaves, August 16, 2022

As Bloomberg explains the problem:

US retailers that stockpiled goods to cushion against supply-chain snarls are finding inventory reduction to be challenging and costly as American households start to pull back from a two-year spending spree.

Such shifts in spending behavior — when combined with over-ordering earlier this year — have left the people who manage supply chains with a costly mess. Products that don’t entice shoppers sit unsold in stores and warehouses, taking up valuable space.

“End of US Splurge Bedevils Retailers Left With Bloated Inventory,” Bloomberg, august 18, 2022


Don’t be surprised if you are having trouble finding warehouse space. According to Multichannelmerchant, available warehouse space is at 2.9%. That is the lowest on record.

Here is how author Mike O’Brien puts it in his article, “U.S. Industrial Space Vacancy at Record Low 2.9%.”

The domestic market for industrial space, including retail and ecommerce distribution and fulfillment centers, won’t see relief in terms of an appreciable jump in new facilities available to help meet high demand until the first half of 2023, as the busy holiday peak season approaches.

U.S. Industrial Space Vacancy at Record Low 2.9%,” multichannelmerchant, Mike o’briend, august 16, 2022

Amazon Increasing order fulfillment Fees

CSA reports that Amazon is temporarily increasing its fulfillment fees for third-party sellers during the coming holiday season. The article by Dan Berthiaume reports as follows:

According to CNBC, Amazon sent an email to its third-party sellers informing them that from Oct. 15, 2022, to Jan. 14, 2023, they will have to pay an extra 35 cents per item shipped via the hosted Fulfillment by Amazon (FBA) logistics service. The extra charge, due to record-setting expense increases, will be in addition to other fees Amazon already charges FBA users.

Report: Amazon hiking seller fees for holidays,” Dan Berthiaume, csa, August 16, 2022

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