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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.
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”