Planned layoffs at Amazon could hamper e-commerce and logistics

Twitter, Meta and now Amazon are conducting mass layoffs as the tech industry grapples with a massive downturn.

According to a Monday report in the New York Times, the e-commerce giant is planning the biggest layoff in company history, cutting about 10,000 jobs. The cuts, people familiar with the matter said, will primarily focus on the company’s device organization, which houses the company’s ailing Alexa business.

But sources said Amazon (NASDAQ:AMZN) is also planning bigger cuts at its retail division, which is responsible for online shopping, physical retail, and some of the company’s logistics activities. Hourly workers, who make up the bulk of the company’s workforce, are unaffected.

Amazon did not immediately respond to Modern Shipper’s request for comment.

The layoffs weren’t necessarily unexpected for Amazon, which has stopped hiring in several segments since September. That includes a freeze of more than 10,000 retail job openings, as well as a month-long corporate hiring freeze.

The marketplace has also repeatedly scaled back its logistics activities in recent months, delaying or closing more than 60 warehouses and shutting down services like Whole Foods’ free delivery and its Scout home-delivery robot as it struggles with slowing e-commerce growth.

Watch: Amazon withdraws air freight

What is surprising, however, is that the planned layoffs would come right at the start of the high season.

Typically, companies like Amazon increase the seasonal setting to accommodate the increased demand that comes with the holidays. But between April and September, according to the Times, Amazon lost about 80,000 people mostly to attrition. (Conversion rates in the company’s warehouses regularly exceed 100%.)

That’s not unusual for Amazon, at least in recent years, and the company plans to hire the same number of seasonal workers this year as it did last year.

However, the fact that all of this is happening just before the holiday season is a not-so-subtle signal that Amazon and newly appointed CEO Andy Jassy are firmly in cost-cutting mode as the company tries to recover from a disappointing third quarter.

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