Amazon plans to cut 18,000 jobs to rein in costs

Amazon has raised the number of employees it plans to eliminate from its corporate workforce to “just over 18,000”, chief executive Andy Jassy said, as the company looks to rein in costs.

In a blog post published on Wednesday, Jassy said the majority of cuts would hit the company’s Stores unit — which includes its core ecommerce business — and its human resources division, known as People, Experience and Technology, or PXT.

The figure is substantially higher than the company had been anticipating internally.

Amazon’s moves mirror belt-tightening by other Big Tech groups, including Meta and Snap, in recent months as large companies dial back rapid headcount growth during the coronavirus pandemic.

Earlier on Wednesday, San Francisco-based Salesforce said it would cut 10 per cent of its 80,000 workforce.

In November, Amazon had expected to cut about 10,000 roles, a person familiar with its plans said — though the person warned that figure could change as an annual review of the company’s business progressed.

The assessment, led by Jassy, resulted in several thousand job cuts before the Christmas break, affecting members of Amazon’s Devices and Books business, which included the team behind its Alexa voice assistant and Kindle ereader. On Wednesday, Jassy said the broader cuts would happen in “early 2023”.

“This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” Jassy wrote.

“These changes will help us pursue our long-term opportunities with a stronger cost structure,” he added.

Jassy confirmed that Amazon would be cutting back the team working on its online store, which has performed poorly post-pandemic as customers have spent less amid rising inflation and supply chain pressures, while logistics costs have soared.

The flagging fortunes of online shopping were a significant drag on profitability in 2022. Excluding its cloud computing business, Amazon recorded an operating loss of almost $2.9bn in the last reported quarter. Shares in the company have fallen by almost 50 per cent over the past 12 months.

The cuts still make up just a fraction of Amazon’s global workforce, which numbers about 1.5mn, though the vast majority of its workers are frontline employees in warehouses or physical stores who are unaffected by the cuts.

Jassy wrote that he was “optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles. Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”

The increased number of cuts was first reported by The Wall Street Journal.

The confirmation of more cuts comes the day after Amazon took out an unsecured $8bn loan, due to mature at the end of the year, from several lenders, led by TD Securities.

“Like all companies, we regularly evaluate our operating plan and make financing decisions — like entering into term loan agreements or issuing bonds — accordingly,” Amazon said.

“Given the uncertain macroeconomic environment, over the last few months, we have used different financing options to support capital expenditures, debt repayments, acquisitions, and working capital needs.”