Amazon has carried out a massive physical expansion over the last two and a half years, adding more than 200 million square feet of new facilities and doubling its physical footprint as the company accelerated plans to grow its already sprawling distribution network in response to a surge of demand from homebound consumers.

All that spending didn’t translate into more efficiency, though. Shipping and fulfillment costs now account for 35% of Amazon’s overall operating expenses, up from 28% in 2019, to the tune of roughly $40 billion last quarter. (For comparison, revenue for physical and digital product sales during the same period was around $56 billion.) And with online sales growth slowing following a pandemic-induced boom, Amazon’s hefty investment is turning into a drag on its bottom line.