E-commerce

Amazon to lay off thousands of employees -source

Amazon.com is planning to lay off around 10,000 employees in corporate and technology roles beginning this week, a person familiar with the matter said on Monday, in what would amount to its biggest such reduction to date.

The cuts, earlier reported by the New York Times, would represent about 3 per cent of Amazon’s corporate staff. The exact number may vary as businesses within Amazon review their priorities, the source told Reuters.

The online retailer plans to eliminate jobs in its devices organisation, which makes voice-controlled “Alexa” gadgets and home-security cameras, as well as in its human-resources and retail divisions, the person said. Amazon’s time frame for informing staff remained unclear.

The source attributed the reduction to the uncertain macroeconomic environment faced by Amazon and other companies.

The news follows a wave of layoffs across the technology sector, which is wary of recession after years of rapid hiring. Just last week, Facebook parent Meta Platforms Inc said it would cut more than 11,000 jobs, or 13 per cent of its workforce, to rein in costs.

Seattle-based Amazon is predicting a slowdown in sales growth for the typically lucrative holiday season.

On a call with reporters last month, Chief Financial Officer Brian Olsavsky said the company saw signs of tighter household budgets for shopping, and it continued to wrestle with high inflation and energy costs.

It since has said it would freeze incremental corporate hiring for several months.

Amazon’s devices unit in some recent years has posted an annual operating loss of more than $5 billion, the Wall Street Journal reported last week. The company has weighed whether to focus on new capabilities for Alexa when some customers use the voice assistant for just a few tasks, the report said.

Company-wide, taking warehouse and transportation jobs into account, which made Amazon’s headcount more than 1.5 million as of September 30, the planned cuts amounted to less than 1 per cent of the retailer’s workforce.

Shares of Amazon have lost more than 40 per cent of their value this year. They were down 1.1 per cent at $99.67 on Monday afternoon.

Not surprising, says analyst

Neil Saunders, MD at GlobalData, said it is not surprising that Amazon is looking to make the company more buoyant by ditching weight, given that the company has lost market share, seen some areas of operations slow and suffered an erosion of market share.

“Although Amazon has just over a month of trading left in this fiscal, it is already clear that 2022 will not go down as a good year for the technology giant. The high-water mark of pandemic-fuelled demand has gone and has been replaced by an ebbing tide.”

But he stressed that while reports of laying off 10,000 people sound dramatic, they need to be set against the context of Amazon’s rapid expansion of recent years. “While any job loss is tragic for those involved, this is a relatively small reduction for a firm the size of Amazon.”

However, Saunders said, the signal that the cuts send is important. “It alerts the market to Amazon’s view that the current slowdown is likely to be protracted and necessitates a rethink of business models and approach. It also ushers in an era where returns on investment are going to be more closely scrutinized, with much less room for error in execution.

“Amazon will remain a powerhouse in retail and beyond. However, it will no longer find growth so easy. It’s change of trajectory is a warning for others in retail, but it is also an opportunity for more nimble players to examine how they can take some share,” concluded Saunders.

• Reporting by Jeffrey Dastin in Palo Alto, California, and Tiyashi Datta and Nivedita Balu in Bengaluru. Editing by Arun Koyyur and Matthew Lewis, of Reuters. Additional reporting by Internet Retailing.