As the US heads towards a possible recession, e-commerce giant Amazon.com Inc. is preparing for the financial downturn with its plans to implement its largest ever reduction in work force.
Through the past two decades, there have been other instances as well where Amazon layoffs were implemented. In the early 2000s, to survive the dotcom burst, the company had instituted a similar layoff. Following that there have been instances where smaller scale layoffs have been implemented to counter corporate bloat while also enacting hiring freezes for short periods of time.
According to a Bloomberg report, the Amazon layoffs this time are a result of some miscalculations on part of the e-commerce giant. The industry as a whole enacted several expansionist measures to facilitate the significant growth in e-commerce following the COVID 19 pandemic and associated lock-downs globally. The expectation was that the shift in consumer preferences to online shopping is likely to remain post the pandemic as well, however, the consumer preferences proved to be more elastic than previously anticipated. As consumer practices return to pre-pandemic ways, Amazon has seen a decrease in demand for a first time in a long while.
The situation was worsened because of the prospects of economic downturn, and even the possibility of a recession in the US and some other western economies. Amazon shares were also down by about 1.4% at the NYSE.
According to the CEO of Amazon.com Inc., Andy Jassy, the company is looking to streamline their operations across the organisation amid the slow down in sales for the e-commerce giant. Hiring freezes had already been instituted across the organisation including in its retail segment as well as corporate groups. Funding for new experimental or unprofitable ventures have also been frozen at the company.
According to reports from internal sources at the company, as reported in Bloomberg, the layoffs are likely to be most severe in the Amazon Devices segment (like Echo smart devices, Alexa digital assistant), retail divisions and human resources.