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Dive briefs:
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Amazon is scrutinizing expenses and downsizing underperforming companies, many of which are focused on retail-related businesses, including the Alexa virtual assistant, according to a Wall Street Journal report on Thursday. is.
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Reports say employees in certain departments are being told to look elsewhere for work. The e-commerce giant reportedly froze corporate hiring in its retail operations last month and later expanded it company-wide. Earlier this year, the company also pulled back on a planned warehouse expansion.
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Amazon spokesman Brad Glasser said in an email that the economy influences the company’s decisions. “We are excited not only for the future of our larger business, but also for new initiatives such as Prime Video, Alexa, Grocery, Kuiper, Zoox and Healthcare,” Glasser said. We regularly review our investment outlook and financial performance as part of our annual business plan review each fall.As part of this year’s review, of course, we take into account the current macro environment and optimize costs. We are looking at opportunities.”
Dive Insight:
Amazon joins other big players, especially in the technology sector, in aggressively working to keep costs down during times of economic uncertainty. The company also has to unwind some of the expansion plans it made when e-commerce surged at the height of the pandemic, but will have to calm down as consumers return to more normal lifestyles. .
The company operates in advertising, subscriptions, logistics, and AWS Cloud services, not retail sales of goods. The company warned in late October that fourth-quarter earnings could be zero.
According to Forrester Principal Analyst Brendan Witcher, every company in every industry should conduct an annual cost review regardless of the state of the economy.
“In fact, this is a practice most retailers do, but because it’s Amazon, it’s suddenly newsworthy,” he said in an email. “The more important part of the story for people to remember is that Amazon rarely overreacts to short-term market conditions and fails. I tend to shoot myself for things I have to, fix Later again, Amazon tends to make cost-cutting moves that don’t put them in a situation where they have to readjust the next year. ”
The e-commerce giant is led by CEO Andy Jassy, who took over from founder Jeff Bezos just over a year ago. According to Neil Saunders, managing director of Global Data, Jassy inherited a company that has become a giant conglomerate over the past decade thanks to its relentless innovation and fearless mindset.
“This kind of thinking, that’s Jeff’s hallmark. bezos – Experimenting with different ideas to ensure Amazon stays at the forefront of new trends Additional to that business,” he commented in an email.
Jassy is keen to cut costs and prioritize profits, sources told The Wall Street Journal. At a time when the economy is uncooperative, it is a necessary remedy. It’s also a complicated undertaking, Saunders said, because Amazon is so large and diverse, and loss makers like Alexa are so important to Amazon’s successful ecosystem.
“This means that the cutting must be done with surgical precision rather than bringing the hatchet into the business,” he said.Amazon must also be careful not to stifle the spirit of innovation that has long enabled progress in areas such as retail. In our view, once the vetting process is over, Amazon will have a clear plan for how it intends to grow and have a good sense of its future direction beyond paving the way to profitability. You will benefit from showing investors that ”
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