E-commerce giant Amazon to follow similar moves by other tech players, with largest headcount reduction in its history
Amazon is to follow similar moves by other tech giants such as Meta and Twitter, and will axe about 10,000 jobs as soon as this week.
This is according to a report in the New York Times, which cited people with knowledge of the matter.
The jobs losses will reportedly be focused on Amazon’s devices organisation, its retail division, and ironically its human resources department.
The exact number of jobs to be cuts is not known, but the New York Times suggested the number to be cut remains fluid.
The move comes as Amazon CEO Andy Jassy seeks to rein in costs as the company grapples with slowing growth in its core retail business, which still accounts for the lion’s share of Amazon’s revenue.
Retail (consumer) sales had surged during the Covid-19 pandemic, as consumers stayed at home and avoided physical shops, and turned to online retailers.
But by early 2022, e-commerce spending began to decelerate, and Amazon in the first quarter reported its slowest rate of revenue growth since the dot-com bust in 2001.
It also posted its first quarterly net loss since 2015.
And things did not get much better in the second quarter.
In July Amazon posted its second straight quarterly loss after a $3.9 billion write down of its investment in Rivian Automotive.
It is clear that Amazon is contending with supply chain issues, inflationary pressures, higher fuel prices, and higher wages (in order to attract and keep workers).
Amazon recently announced pay increases for its front-line employees in America, starting in October.
Amazon’s move to increase the wages of its US workforce came as it seeks to address high staff turnover levels.
Indeed, so serious is the staff turnover issue in America, that a leaked internal memo in July suggested that Amazon could deplete the US labour supply by 2024.
In recent months, Amazon has closed or cancelled the launch of new facilities, and it is delaying the opening of some new buildings after its expansion during the pandemic left it with too much warehouse space.
It was also reported that Amazon has also closed nearly all of its US call centres in a bid to save on real estate.
Amazon has already undertaken a number of other cost cutting measures.
In April this year it passed its rising costs onto third-party sellers that utilise the Amazon fulfilment services.
Then in July it raised the cost its Prime Service in the UK and Ireland, after raising the price in the US earlier in the year.
Amazon is also contending with too many workers after it went on a pandemic hiring spree. In the second quarter, Amazon reportedly trimmed its headcount by 99,000 people to 1.52 million employees.
And in an effort to drum up more sales, Amazon announced a second Amazon Prime Day in 2022.
The first took place in July, but the second Prime Day took place on 11 and 12 October.
Amazon’s job losses news follows a wave of layoffs across the technology sector.
Just last week, Facebook parent Meta Platforms said it would cut more than 11,000 jobs, or 13 percent of its workforce, to rein in costs.
Twitter meanwhile has shed 50 percent of its workforce under Elon Musk, and now it is reported that Musk is axing over 4,000 external contractors employed in content moderation.