Amazon advertising to face cuts as ecommerce leader lays off 9,000

Amazon is set to undergo a second round of layoffs in the coming weeks, bringing the total number of employees let go over the last six months to 27,000.

The latest round of cuts will reduce the number of roles at the company by 9,000.

The layoffs will zero in on several of the fast-growing, high-margin divisions that grew to become forces in their industry verticals after Amazon built them out to provide services for its ecommerce platform. Affected areas will include advertising, the cloud computing division AWS, the streaming platform Twitch and people ops division People Experience and Technology (PXT). Amazon did not break down the number of layoffs in each division.

In advertising, the cuts come in a division that has become a success story for the company. Amazon revealed a $31 billion advertising business in early 2022, meaning the division was larger than the advertising arms of media giants like YouTube on its own. In the fourth quarter of 2022, Amazon posted 19% growth in advertising as the business reached $11.6 billion in revenue.

While the ecommerce division, known internally as Stores, was not exposed in this round, it marks the second time that PXT will face cuts.

In a company memo, CEO Andy Jassy wrote that the additional layoffs follow the conclusion of Amazon’s annual planning process. The goal of this process, Jassy said, was “to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences.”

“For several years leading up to this one, most of our businesses added a significant amount of headcount,” Jassy wrote. “This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”

Jassy added that the additional round of cuts is expected to be completed by mid-to-late April. While companies often seek to avoid multiple rounds of layoffs in a short period of time, Jassy said the multipart process was a result of the planning calendar.

“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago,” Jassy wrote. “The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible.”

Alongside the job cuts, Amazon has also scaled back on many expansion projects. Most recently, the company said it will close eight of its cashierless, in-person Amazon Go convenience stores.

While tech layoffs were a top story of late 2022, the cuts are continuing into 2023 as ecommerce faces continued headwinds on discretionary spending from inflation, and investors continue to turn cautious in an atmosphere of interest rate hikes and falling post-pandemic stock prices.

Among major companies in ecommerce, Facebook parent Meta said last week that it will lay off an additional 10,000 workers beyond the previously announced reduction of 11,000 workers in 2022, as CEO Mark Zuckerberg dubbed 2023 the “year of efficiency.” Meanwhile, SMS and email marketing automation platform Klaviyo laid off 140 people across all divisions last week, TechCrunch reported.

The cuts come after tech companies saw their fortunes soar during the pandemic, leading to a hiring frenzy.

Yet tech is proving to be an anomaly in the current economy. The labor market as a whole hasn’t cooled off coming out of the pandemic. U.S. companies, including retailers, continue to add jobs at a sizable clip, and unemployment remains at historic lows.