Citing an iffy economic outlook, Amazon has upped planned layoffs from 10,000 to more than 18,000 employees, including staff from its retail stores.
CEO Andy Jassy said in a blog update on Wednesday that the job cuts will come mainly from the e-tail giant’s Amazon Stores; People, Experience and Technology (PXT); Amazon Devices; and Amazon Books units. Jassy had announced plans for job eliminations in mid-November but didn’t quantify the number of expected layoffs.
Jassy’s November memo on the upcoming job reductions came several days after The New York Times reported that Amazon planned to lay off about 10,000 employees, or approximately 3% of its corporate staff and less than 1% of its global workforce of over 1.5 million. In early November, Beth Galetti, senior vice president of Amazon’s PXT organization, said in a memo that the company was instituting a hiring freeze in its corporate workforce and various business units. The Times had reported a month earlier that Amazon was pausing corporate hires in its Stores unit, which includes brick-and-mortar and online retail.
“Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles. Several teams are impacted; however, the majority of role eliminations are in our Amazon Stores and PXT organizations,” Jassy wrote in his latest blog post.
“We don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted. We are working to support those who are affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support,” he said, adding that Amazon plans to communicate with the impacted employees starting on Jan. 18.
Signs of a slowdown by Amazon—as the Seattle-based company tries to balance growth efforts amid a cloudy economic forecast—had recently appeared in its Amazon Fresh grocery store business.
After a steady drumbeat of openings in the United States over the past couple of years, Amazon Fresh’s expansion seems to have stalled, with a number of sites for planned new stores sitting idle, according to published reports. Currently, Amazon operates 44 Amazon Fresh stores in eight states and the District of Columbia, as well as 19 in the United Kingdom, where the retailer also reportedly has reined in the grocery banner’s expansion.
Amazon already had begun a physical-store pullback last March, when the company unveiled plans to close all of its bookstores, pop-up retail sites and shops carrying toys and home goods in the U.S. and U.K. That included 68 locations under the Amazon Books, Amazon 4-Star and Amazon Pop-Up banners.
Still, Jassy in his Nov. 17 memo described the Stores business as one of the units with “big opportunities ahead” for Amazon. Similarly, in her Nov. 2 memo, Galetti cited grocery as one of the newer initiatives in which Amazon “remains excited about our significant investments,” and she said the company still intends to “hire a meaningful number of people in 2023.”
A late December LinkedIn post by Tony Hoggett, senior vice president of worldwide physical stores and specialty fulfillment at Amazon, also noted the company’s investment and expansion in its retail store business and related fulfillment and logistics, spanning Amazon Fresh, Amazon Go, Amazon Style, Whole Foods Market, Amazon Distribution and Fulfillment Solutions (including rapid delivery).
“In 2022, we opened dozens of physical stores across grocery and fashion, and expanded One Day delivery to rural areas across the U.S.,” Hoggett said in the posting. “But reaching more customers isn’t just about opening stores or expanding delivery coverage, it’s working together through partnerships to increase access to innovative shopping experiences and selection we know customers love.”
Jassy had consistently pointed to a tough macro-economic environment and the need for Amazon to rein in costs—following swift expansion since the pandemic—in reporting fiscal 2022 quarterly results. For the third quarter ended Sept. 30, Amazon saw 15% overall net sales growth, including a 10% gain in physical-store sales, but came in a bit below Wall Street’s consensus sales forecast and posted a year-over-year dip in net income, despite topping the Street’s average earnings-per-share estimate by 7 cents.
“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so. These changes will help us pursue our long-term opportunities with a stronger cost structure,” Jassy said in his memo on Wednesday. “However, I’m also optimistic that we’ll be inventive, resourceful and scrappy in this time when we’re not hiring expansively and eliminating some roles. Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year. We often talk about our leadership principle ‘Invent and Simplify’ in the context of creating new products and features. There will continue to be plenty of this across all of the businesses we’re pursuing.”