Retail giant Amazon developed so much industrial space and hired so many people in response to pandemic-era demand for goods sold online that the company now has an excess in both that is affecting its bottom line, the company's chief financial officer said during the e-commerce giant's first-quarter earnings call on Thursday.

"We currently have excess capacity in our fulfillment and transportation network," Amazon CFO Brian Olsavsky said during the call, adding that during Q1 2022, the company "quickly transitioned from being understaffed to being overstaffed."

"During the pandemic, we were facing not only unprecedented demand but also extended lead times on new capacity," Olsavsky said. "And we built towards the high end of a very volatile demand outlook."

He estimated that this overcapacity, combined with the extraordinary leverage the company experienced during the first quarter of 2021, resulted in $2B of additional costs year-over-year in Q1 2022.

Amazon had about 200 industrial projects in the pipeline until recently, according to Newmark's Q1 2022 national industrial market report, but now the e-commerce behemoth is withdrawing plans for some new industrial projects — and it isn't alone in doing so.

Amazon's industrial overcapacity hints at a wider excess in the U.S. industrial market, with developers now pausing or otherwise delaying warehouse and distribution center projects as they perceive that demand might not keep up with an ongoing surge in supply.

"While first-quarter leasing activity remained well above pre-pandemic levels, some firms have recently paused expansion projects in reaction to current conditions," according to the report.

Even Amazon's slowdown in industrial use doesn't point to a crash for the sector, however.

"It is likely that prospective tenants in expansion mode, particularly in the 3PL industry, will be willing to take projects Amazon withdraws from," Newmark says in the report.

Amazon reported a net loss of $3.8B in the first quarter, or $7.56 per share, compared with net income of $8.1B, or $15.79 per share, during the first quarter of 2021. Its stock dropped more than 12% as of midday Friday.

“Losing money in North America just seems like something investors thought we were beyond,” Brian Yarbrough, an analyst at Edward Jones, told Bloomberg. “Amazon needs to prove to investors that as they slow down spending, they can improve profits.”

Now that demand patterns have stabilized, Olsavsky said, the company sees an opportunity to better match warehouse capacity to demand, though the oversupply will continue to cost Amazon money.

"We do expect the effects ... to persist for the next several quarters as we grow into this capacity," Olsavsky said.