Amazon Layoffs Signal Changes in Its Retail Business

Layoffs in the tech sector aren’t isolated to Silicon Valley, as Seattle-based Amazon sheared hundreds of workers from its cloud division — a crucial business unit that builds tech for the company’s commerce operation, as well as those of outside retailers and brands.

On the chopping block at Amazon Web Services are positions in sales, marketing and global services, in addition to a few hundred roles from its Physical Stores Technology team. The revelation came from internal emails leaked to Geekwire on Wednesday. WWD confirmed the news directly with the company.

Naturally, Amazon seeks to eliminate duplication in the workforce. A statement from the company chalked up the job cuts to streamlining, while seemingly acknowledging the tough reality of excising several hundred roles. “We didn’t make these decisions lightly, and we’re committed to supporting the employees throughout their transition to new roles in and outside of Amazon,” it said. “These decisions are difficult but necessary as we continue to invest, hire and optimize resources to deliver innovation for our customers.”

But, according to the company, whittling down AWS isn’t just about trimming the fat — it’s about focusing on “key strategic areas” that make the most impact. Those efforts can extend far beyond Amazon’s own retail business and to the AWS’ client base, which includes 1,179 fashion brands, according to data from ReadyContacts.

The latest round of layoffs follows earlier cuts that impacted some 27,000 employees in 2022 and 2023, as part of chief executive officer Andy Jassy’s cost-cutting campaign. Ultimately, the belt-tightening appears to have worked. In its latest quarterly financials, filed in February, the $170 billion company beat analyst projections for earnings and revenue on the whole, as did particular business units like advertising. The outlier was AWS, whose $24.2 billion haul just barely met expectations.

That Amazon would pay particular attention to its cloud unit is hardly a surprise. At the time, chief financial officer Brian Olsavsky said AWS saw growth slow over the past year, primarily due clients’ own cost-cutting. On the other hand, he also said that work was picking up. The reason: The artificial intelligence boom. According to Olsavsky, AWS saw “a lot of interest” in its generative AI offerings, such as the Q chatbot for businesses.

Its most visible efforts may be on the consumer front with launches like the Rufus AI shopping assistant. Meanwhile, it’s busy trying to break new retail ground through its Amazon One biometrics platform, which allows customers to enter brick-and-mortar stores and pay for goods by showing their palms to scanning terminals. Hand-scanning tech looks positioned to take the place of Amazon’s camera-and-sensor-based “just walk out” system — which, according to recent reports, it is backing away from its grocery businesses.

Now the Physical Stores Technology team will surely see some impact from scrubbing hundreds of jobs. The company described the layoffs as part of “a broader strategic shift in the use of some applications in Amazon’s owned as well as in third-party stores,” though it didn’t specify what that meant. In another message to employees, Dilip Kumar, vice president of AWS applications, referenced an impact to checkout teams.

Altogether, the details paint a picture of Amazon retail being in flux, and how this shakes out at AWS could influence the way retail works across the board and influences sectors like fashion.

Amazon also pointed out that, although it’s eliminating some positions, it’s in a hiring mode for thousands of others at AWS, while it tries to shift workers internally when possible. U.S.-based workers being laid off will continue to receive pay and benefits for 60 days, support for external placements and transitional health benefits, with some eligible for severance.

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