If the golden age of cross-border e-commerce was a magnificent bubble, that bubble is now rapidly deflating. Amazon's massive FBA warehouse closures and FedEx's dramatic profit plunge signal the arrival of a global trade winter. Are cross-border sellers prepared for this challenge?
Amazon's FBA Strategic Retreat: A Cost-Cutting Necessity?
Recent reports reveal Amazon's internal plans to close or cancel 42 FBA warehouses in Q3 while postponing the opening of 27 new facilities. The affected warehouses, totaling approximately 2.5 million square meters, are primarily concentrated along the East and West Coasts, particularly near New York Harbor. Concurrently, Amazon plans to lay off over 100,000 employees—a clear strategic correction following its warehouse footprint nearly doubling during 2020-2022.
The pandemic-driven e-commerce boom prompted Amazon's aggressive expansion. However, with fading pandemic benefits and slowing consumer demand, excess warehouse capacity has become an unsustainable burden. Sky-high rental costs, especially in coastal regions, have forced Amazon into this survival strategy—shuttering underperforming facilities to streamline logistics networks and improve profitability.
FedEx's Profit Collapse: A Microcosm of Global Shipping Weakness
Logistics giant FedEx faces parallel challenges. Weak global shipping volumes caused Q2 profits to plummet, prompting the company to withdraw its full-year growth forecast—a development that triggered a 15% stock price crash. FedEx will close 90 U.S. offices, reduce hiring, and cut flight frequencies, reflecting broader global trade contraction.
The FedEx CEO noted that anticipated demand recovery following China's post-pandemic factory reopenings failed to materialize. Instead, declines occurred across all market segments, suggesting persistent consumer weakness and casting doubt on global economic recovery timelines.
Survival Strategies for Cross-Border Sellers
These developments serve as a wake-up call for cross-border e-commerce sellers. To withstand softening demand and rising costs, sellers must pursue operational excellence and diversification:
- Precision Operations: Refine product selection, enhance listing quality, and optimize ad spending to reduce overhead.
- Channel Diversification: Expand beyond Amazon by developing alternative platforms and independent storefronts to mitigate risk.
- Supply Chain Optimization: Forge stable supplier partnerships and implement lean inventory management to control procurement costs.
- Innovative Marketing: Experiment with livestream commerce and social selling to capture emerging traffic sources.
The e-commerce landscape has fundamentally shifted. Success now depends on operational discipline, diversified channels, efficient supply chains, and marketing innovation—the essential tools for navigating this new era of constrained growth.