It has been a couple of years since Jeff Bezos, the founder of Amazon, stepped down from his position in the company. Taking over as the CEO since July 2021 is Andy Jassy.
Following Bezos' departure, Amazon faced a series of
challenges. His future seemed uncertain, leading to the unfortunate layoff of
27,000 employees.
Over the past two years, Amazon has encountered a prolonged
period of difficulties. These include a decline in stock value, a decrease in
customer base, the cancellation of partnerships, and the largest layoffs
witnessed in the tech industry.
Retail Business After the Pandemic
Ironically, the pandemic turned out to be a blessing for
Amazon. With a 39% growth in its retail business in 2020, Amazon aims to double
that growth within the next 24 months.
The intention was to quickly expand capacity if consumer
habits remained unchanged after the pandemic. However, the opposite occurred.
During the pandemic recovery, there was a decrease in people
spending time and making purchases on Amazon. This can be attributed to the
impact of rising interest rates.
Jassy stated, "We were aware that we were probably
overbuilding."
Efficiency
In order to optimize efficiency, Jassy had to make tough
decisions regarding unprofitable business ventures. This included implementing
mass layoffs and streamlining operations across all business units.
Throughout 2023, around 27,000 employees will be affected by
the layoffs. The layoff process started with 18,000 employees in January and
continued with an additional 9,000 in March. However, Jassy assured that new
employees will still be recruited for strategic areas of the company.
Amazon also found alternative uses for unused warehouses by
renting them out. Additionally, the remaining warehouse space is utilized to
its fullest potential. Furthermore, Amazon transitioned from a national
fulfillment approach to a regional one.
Cloud Business
The uncertain economic climate has also impacted Amazon's
B2B cloud service system, Amazon Web Service (AWS).
Large enterprise clients of AWS are now opting for more
cost-effective plans to save money. In some cases, companies have even reduced
their usage of AWS services.
According to Slate, AWS's growth rate decreased to 16% in
the first quarter of 2023, as compared to 20% in the previous year's period.
In an effort to keep up with competitors like Microsoft and
Google, who are utilizing AI technology, AWS launched a new tool for developing
AI applications in April.
