Three interesting stories over the weekend about Amazon’s efforts to right-size the company in a post-pandemic, high-inflation environment:
• From Computer World:
“Amazon plans to lay off as many as 20,000 employees across the company in the coming months, including distribution center workers, technology staff and corporate executives—about twice as many as previously reported—as the retail and cloud computing giant retrenches after going on a hiring spree during the pandemic.
“Amazon employees are ranked from level 1 to level 7, and staff at all levels will likely be affected, according to sources with direct knowledge of the matter, who requested anonymity. The New York Times first reported in mid-November that Amazon would enact mass layoffs, citing sources that said that as many as 10,000 people would be laid off.
“Company managers over the last few days, however, have been told that they should try to identify work performance problems among employees, as part of an effort to lay off about 20,000 people, according to sources. Twenty thousand employees are the equivalent of about 6% of corporate staff, and about 1.3% of Amazon’s total 1.5 million-strong workforce including global distribution center and hourly workers.”
• From The Information:
“Amazon is rescinding job offers made to people in its retail organization, a sign that its cutbacks have extended beyond the devices division where layoffs were concentrated.
The Worldwide Amazon Stores organization includes teams that work on Amazon’s Buy With Prime feature, Amazon Go stores, Whole Foods market and the company’s private label products.
“In a statement, Amazon said: ‘As we continue with our annual operating plan review, and in light of the challenging economic conditions, we’ve made the difficult decision to eliminate some roles in particular businesses for which we’ve extended offers but the candidates have not yet joined the company. This decision impacts a very small number of roles, especially compared to the tens of thousands of offers we’ve extended this year alone, and we plan to continuing hiring in 2023’.”
• From CNBC:
“Amazon Web Services has been the biggest growth engine for its parent company over much of the past decade, taking business from some of the largest tech vendors in the world.
But as corporations face the most daunting economic environment since the 2008 financial crisis, those massive checks they’re writing to AWS for their tech infrastructure are getting greater scrutiny … AWS is coming off its slowest period of expansion since at least 2014, the year Amazon started reporting on the group’s finances. It also missed analysts’ estimates. Still, the division recorded growth of 27.5%, outpacing Amazon’s overall growth of 15%. And it generated $5.4 billion in operating income, accounting for more than 100% of profit for its parent company.
“With such a hefty cash balance, AWS can afford to accommodate customers in the short term if it means more business in the future. The company did the same thing during the pandemic in 2020, when Amazon sent some users an email with an offer of financial support.”
The story notes that “Amazon knows customers are facing challenges. In some cases, Amazon cloud employees reach out to clients to see how it can help optimize spending, said David Brown, AWS’ vice president responsible for the core EC2 computing service. At other times, customers contact AWS, he said.”
One business cited in the story: the National Football League, “which uses AWS to produce statistics and schedules, is making conservative plans around costs.”
KC’s View:
It is smart business for Amazon to require its managers to justify and rationalize their expenses and head counts, and the percentages being cited seem pretty typical for what a lot of tech companies are going through at the moment. It only is in the context of Amazon’s image that it seems off-brand.
But … I do find myself wondering if this all is going to have an impact on Amazon’s customer-first approach to business. Is it the customer first at any cost, or just at a justifiable cost? Do the people leading the company – regardless of how long they have been at Amazon – feel the Bezos DNA in their bones? Or have growth and events diminished its cultural imperatives to some degree?
The big question: Does Jeff Bezos return as CEO in 2023?
The answer: I don’t know. But I wouldn’t bet against it.
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