Amazon to Close Grocery Fulfillment Center in San Francisco

Company evaluating network to ensure it fits business needs

5/6/2024

Amazon's same-day fulfillment centers can be used to meet its shoppers' needs.

Amazon is planning to cease operations for its 38,500-square-foot grocery fulfillment center in San Francisco’s Dogpatch area on June 27, as reported by the San Francisco Chronicle. As it closes one facility, the e-commerce giant is looking to build a 650,000-square-foot logistics center in San Francisco’s Showplace Square neighborhood, which is being vetted by city planners.

The move will affect 85 workers, according to a WARN notice issued by the California Employment Development Department. An Amazon representative confirmed that all of those employees will be offered other job opportunities with company, and that it will continue to fulfill customers’ orders from its other existing sites.

“We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees, customers, partners and drivers. As part of that effort, we may close older sites, enhance existing facilities or open new sites, and we weigh a variety of factors when deciding where to develop future sites or maintain a presence,” the representative said in a statement to the San Francisco Chronicle. “In this case, employees at our San Francisco fulfillment center are being offered transfers to other facilities nearby, or support if they choose not to stay with Amazon.”

In his recent letter to shareholders, Amazon President and CEO Andy Jassy addressed several aspects of the retail behemoth’s grocery business strategy. Among its opportunities, Jassy noted that Amazon can leverage its more than 50 same-day fulfillment facilities within its store business, which handle top SKUs, to provide a better grocery-shopping experience for customers. While Amazon is working on enhancements to its Amazon Fresh stores and growing its organic grocery sales with Whole Foods, the same-day facilities also have great potential, he said. “What if we used our same-day facilities to enable customers to easily add milk, eggs or other perishable items to any Amazon order and get [them the] same day? It might change how people think of splitting up their weekly grocery shopping, and make perishable shopping as convenient as nonperishable shopping already is,” the CEO wrote.

Amazon reported its first-quarter earnings last week. Net sales increased 13% to $143.3 billion, compared with $127.4 billion in Q1 2023 – excluding the $0.2 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter. North America segment sales jumped 12% year-over-year to $86.3 billion.

Operating income soared to $15.3 billion in Q1, compared with $4.8 billion in Q1 2023. North America segment operating income was an impressive $5.0 billion, compared with last year’s $0.9 billion.

Net income rose to $10.4 billion, or 98 cents per diluted share, compared with $3.2 billion, or 31 cents per diluted share, last year.

Seattle-based Amazon is No. 2 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century.