In a supposed effort to get streamlined, stay competitive and “flatten bureaucracy,” Amazon continued its overhaul of its corporate operations by laying off more than 14,000 workers last week.
The move is the latest in CEO Andy Jassy’s promise to make Amazon operate like “the world’s largest startup” by jettisoning bureaucracy to move faster and stay competitive.
The move follows the culture shift underway at Amazon since Jassy became CEO in 2021, including a hard pivot back to in-office work and a push for employees to do more with less.
“We’re working hard to try to flatten our organization and have fewer layers because in the very earliest days of Amazon, it’s been true for many years, we had very high ownership at every level of the organization, including on the frontline,” Jassy said at an Amazon-hosted event in front of thousands of worldwide sellers.
Another round of cuts is expected in January, after the holiday rush and Amazon’s annual cloud conference, held in early December. Among the units expected to be impacted are Amazon’s stores and human resources divisions.
The cuts will ultimately result in Amazon’s largest layoffs in its 31-year history. Amazon has been trimming headcount since late 2022, resulting in a total of 27,000 job cuts, though more recent reductions have been on a smaller scale.
Amazon did show better-than-expected third-quarter earnings, and though its stock was showing signs of trailing, a 14% jump over two days of trading put it at a record high on Monday.
Amazon’s largest profit center, cloud computing unit AWS, reported second-quarter sales of $30.9 billion, a 17.5% increase that was well below gains of 39% for Microsoft’s Azure and 32% for Alphabet’s Google Cloud.
Still, estimates indicate that AWS will have boosted third-quarter sales by 18% to $32 billion, though that is slightly lower than last year’s 19% increase.
While Amazon’s e-commerce unit remains strong, Amazon and other retailers continue to navigate the ongoing tariff challenges, as well as potential cost increases and a shift in consumer demand.
Amazon’s Alexa service, an early leader in the voice assistant market, has faced challenges from generative AI companies, mainly OpenAI. It remains unclear how well the upgraded Alexa+ will fare, and it remains to be seen if that or newer consumer devices will attract the attention of holiday shoppers.
Jassy continues searching for Amazon’s next growth opportunity, or “pillar,” to go alongside its e-commerce, cloud and Prime membership programs.
The company has invested in satellite internet, healthcare, entertainment and self-driving vehicles, with varying results.
Jassy told investors the cuts were not a result of financial strain or AI replacing workers, but rather a “culture” shift inside the company, spurred by a hiring spree during the company’s ascension that left “a lot more layers” and slower decision-making.
Jassy’s cost cuts have not just been layoffs, as he has shuttered several of Amazon’s physical store chains and retired the roving sidewalk robot, telehealth service, and health and fitness wearables.
Earlier in the year, Jassy admitted that internal AI usage would shrink the corporate staff in the coming years. At the same time, Amazon is aggressively investing in AI infrastructure and pushing corporate employees to utilize AI tools in their work.
The results have been mixed, as some staff members were counseled to use the tools to speed up their work, while others asked for more clarification on rolling AI out more responsibly.
Jassy is making the case that AI will transform work for the better and make jobs “even more exciting and fun,” but Amazon’s own internal employee advocacy group, Amazon Employees for Climate Justice, has published an open letter asking for more responsibility in the AI rollout.
In all, Amazon appears to be heading for another big holiday selling season. It plans to offer 250,000 seasonal jobs to help staff warehouses and other needs, the same as in the last two years.
