The Supply Chain Matters blog highlights today’s breaking news reports indicating that Amazon will initiate staff level layoffs as early as this week.

Citing informed but unnamed sources, both The New York Times and The Wall Street Journal are reporting that online retail and Cloud infrastructure provider Amazon will initiate job cuts as early as this week.

According to the published Times report (Paid subscription or metered view), the action will involve approximately 10,000 employees in corporate and technology roles, and will be focused on the devices, retail and human resources business areas. Reportedly, the total number of layoffs remains “fluid.” Noted in the devices area is specifically the online provider’s Alexa voice assistance business unit.

Noted in The Wall Street Journal report (Paid subscription or metered view), the company has separately started layoff actions involving contractors working in recruiting, and that additional planned layoffs are among full-time employees.

As of our posting, Amazon has declined to specifically comment on either of these reports.

As Supply Chain Matters has highlighted in prior postings, a series of developments and announcements have led up to this latest action.

In mid-September, we chronicled a series of developments which we dubbed as the Amazon News Cycle Accelerating with a Purpose.

In late October, the announcement of Q3 quarterly financial performance provided a number of concerning warning signs that prompted an immediate reaction to the company’s stock value. Equity analyst and Wall Street influencers used adjectives such as “atrocious,” “dreadful,” and “disappointing,” in summing up the performance while others acknowledged that the online provider went too aggressively on its expansion plans during the last two plus years. What attracted the most attention and concern was sales and profitability projections for the current holiday fulfillment quarter, including anticipated Q4 sales growth to be a mere 2 percent, and operating profitability guidance for the current holiday fulfillment quarter as being between zero and $4 billion.

Last week, Bloomberg declared that the online platform provider was the world’s first public company to lose upwards of a trillion dollars in market value. The Wall Street Journal followed the next day with a published report, again citing knowledgeable resources, indicating that CEO Andy Jassy was leading a broad month-long cost-cutting review effort with an emphasis on paring back businesses deemed not meeting profitability goals including the Alexa business unit. Noted was that the tech provider has lost $3 billion this year after posting profitability levels of $33 billion in 2021 and $21 billion in 2020.

Earlier this month a freeze was placed on hiring of the corporate workforce while hiring for retail division positions has halted. A company senior executive notified internal staffers that the pause in corporate hiring will be in place for few months and adjusted when it makes sense to do so.

These actions are a result of the company’s annual planning and business review process. While reports indicate that significant operational workforce reductions of warehouse and customer fulfillment are not currently included, reports indicate that efforts remain underway to reduce operational costs and increase automation and efficiency efforts within operations and last-mile fulfillment.

Added Perspectives

To summarize, while these reports of looming layoffs are likely not unexpected, this sudden timing of the action is. It could be a sign that financial performance in this final quarter will need a further boost.

This Amazon related development also coincides with a slew of layoff announcements that have dominated tech news over the past several weeks. That include action taken by Lyft, Meta, parent of Facebook, Microsoft, Oracle, Salesforce, Twitter and others. Most of the tech industry is now focused on belt tightening in preparation for a global economic downturn. Similar to Amazon, it further an opportunity to assess business operating  and profitability objectives.

In the specific case of Amazon, under the new leadership of Andy Jassy, the provider is  clearly shifting to more cost and profitability conscious provider.

 

Bob Ferrari

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