Why is there Amazon layoffs in 2023? The tech industry’s crisis from last year continues. Tens of thousands of tech professionals will again lose their employment due to layoffs in 2023. This time, the largest tech companies, such as Google, Amazon, Microsoft, Yahoo, Meta, and Zoom, have laid off employees. Startups have also declared layoffs in every industry, from enterprise SaaS to cryptocurrency.
These layoffs have a standard justification that refers to the macroeconomic situation. Also, the necessity for discipline on a bumpy road to profitability. Yet, monitoring the layoffs helps us recognize their effect on innovation. It helps us to know whose businesses are under severe strain and who is available to hire for the companies currently expanding. Sadly, it also serves as a reminder of layoffs’ negative effects on people and how their risk profiles may change in the future.
On April 26, Amazon announced that, among other departments, Halo Health would be shut down as of July 31. The 9,000 employees that were to be laid off were announced in March. The 27,000 job losses this year include the 18,000 layoffs announced in January. It represents 8% of Amazon’s corporate personnel. Let us view in detail about this in the article.
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Overview of Amazon
Through online and physical storefronts in North America and other countries, Amazon.com, Inc. engages in the retail sale of consumer goods and subscriptions. Its three operating segments are North America, international, and Amazon Web Services (AWS).
Products purchased for resale and items provided by third parties are among the products the company sells through its outlets. It creates and publishes media material in addition to manufacturing. It sells electronic gadgets like Kindles, Fire tablets, Fire TVs, Rings, Blink, Eero, and Echo.
The business also provides vendors with programs that let them sell their goods in its stores. It also provides programs that let content creators publish and market their work. It includes writers, musicians, filmmakers, Twitch streamers, and app developers. It offers advertising and digital content subscriptions. Apart from these, computing, storage, databases, analytics, machine learning, and other services are offered.
The business also provides Amazon Prime, a membership club. It benefits buyers, vendors, builders, businesses, content producers, and advertisers. Seattle, Washington, serves as the company’s corporate headquarters. It was founded in 1994.
There are four guiding concepts at Amazon:
- customer obsession rather than competitor focus,
- passion for invention,
- commitment to operational excellence, and
- long-term thinking.
Journey of Amazon
Amazon is the biggest online retailer in the world and a well-known cloud service provider. Amazon began as an online book retailer but has now evolved into a web-based company. It specializes in e-commerce, cloud computing, digital streaming, and artificial intelligence (AI) services.
The company uses an Amazon-to-buyer sales strategy. It has a massive product selection and inventory. It allows customers to buy almost anything. The products include clothing, household goods, jewelry, books, movies, electronics, pet supplies, furniture, toys, and gourmet food.
Around the world, Amazon has its own websites, software development centers, customer support centers, data centers, and fulfillment centers. Since it was established by Jeff Bezos on July 5, 1994, in his Bellevue, Washington, garage, Amazon has come a long way. Here is a summary of Amazon’s development from a small online bookstore into an international commerce company.
On July 16, 1995, Amazon debuted as an online bookseller. Bezos initially incorporated the business under the name Cadabra. But he eventually changed it to Amazon. For alphabetical placement, Bezos allegedly searched a dictionary for a word starting with the letter A. He chose the name Amazon because it was unusual and exotic. He intended for the corporation to be as big as the Amazon River, one of the world’s biggest rivers. The company’s guiding principle has always been to “get big fast.”
As of 2005, Amazon Prime Free two-day shipping is provided throughout the contiguous United States. Also, benefits for reading, shopping, and streaming through this subscription-based program are provided to the consumers. The current cost of an Amazon Prime membership is $14.99 per month or $139 annually. This is according to the company’s website.
Evolution of Amazon
The 2000s also saw the arrival of Amazon Web Services. It is a comprehensive and developing cloud computing platform. The first Amazon Web Services (AWS) offers were introduced in 2006 to offer online services for websites and client-side apps. The foundation of the company’s expanding array of web services is Amazon Elastic Compute Cloud (EC2) and Simple Storage.
Service (S3). The same year, Amazon also introduced Unbox. It is a cloud computing and video-on-demand service.
With the introduction of its first Kindle e-reader in 2007, Amazon altered how consumers acquired books while also influencing how they read them. Using this device, and users can browse, purchase, and read e-books, magazines, and newspapers from the Kindle Store.
The Kindle Fire, Amazon’s first tablet computer, was released in 2011. The Amazon Fire TV Stick, a member of the company’s broad lineup of streaming media devices, was released in 2014.
In 2013, Amazon launched an online marketplace for fine arts called Amazon Art. It has exhibited original works by well-known artists like Claude Monet and Norman Rockwell.
Consumers first received the well-known Amazon Alexa in-home virtual assistant in 2015. In 2016, they received the Echo Dot with Alexa built-in. In 2017, Amazon purchased Whole Foods Organic Market. In 2018, the chain of Amazon Go cashier-less markets was introduced. Consumer reliance on Amazon increased due to the surge in in-home shopping during the COVID-19 epidemic. This tendency is likely to continue.
The financial status of Amazon
In the first quarter of 2022, Amazon saw big growth in net sales but a decline in operating profitability. This is according to a press statement on the company’s investor relations website.
The following are some key figures from the release:
Comparing the first quarter of 2022 to the first quarter of 2021, net sales climbed 7% to $116.4 billion. Net sales climbed 9% in comparison to the first quarter of 2021. It excludes the $1.8 billion in adverse effects from year-over-year changes in foreign exchange rates over the quarter.
As opposed to $8.9 billion in the first quarter of 2021, operating income declined to $3.7 billion in the first quarter.
In the first quarter, there was a net loss of $3.8 billion as opposed to a net profit of $8.1 billion in the same period in 2021.
Layoffs in Amazon
In response to slowing sales growth in its most profitable segment, Amazon.com Inc. has begun laying off staff in its cloud services division.
The head of the division informed workers that employees of Amazon Web Services in the US, Canada, and Costa Rica would lose their jobs. AWS produces most of the company’s profits, although growth is slowing as corporate clients try to reduce costs.
Overall, Amazon is eliminating 27,000 employees, mainly in corporate offices. It’s because a hiring spree during the global outbreak left the company with excess staff.
Amazon announced more than 9,000 layoffs in March after wrapping up a round of job cuts earlier this year. This move affected a total of approximately 18,000 people. CEO Andy Jassy said he would focus on AWS, human resources, marketing, and the Twitch live streaming platform. Recent cuts were made, notably to the firm’s video game division and Twitch.
In the email examined by Bloomberg, AWS CEO Adam Selipsky stated, “It is a tough day across our company.” As demand for digital services increased due to the pandemic, AWS quickly increased its workforce like a large part of the rest of Amazon.
Selipsky stated, “Given this rapid expansion as well as the general business and macroeconomic climate, we must focus on identifying and allocating our resources behind our top priorities for things that matter the most to customers and will advance our business. In many instances, this entails team members changing the projects, initiatives, or teams on which they work. In some instances, it has led to eliminating these roles.”
At the end of last year, Amazon had 1.54 million employees across the globe. Most personnel who pack and ship goods in warehouses are hourly workers. The company claimed to have about 350,000 corporate employees before the first round of layoffs started in November.
Other IT behemoths have all cut back on staff. They are:
Meta Platforms Inc., Google parent company Alphabet Inc., Microsoft Corp., Dell Technologies Inc., and International Business Machines Corp.
Investors will keep an eye on Amazon’s financial results to determine if cost-cutting initiatives have improved profitability. Also, they will check whether cloud service sales growth has peaked.
Amazon has announced additional layoffs throughout the advertising team.
The released memo states that only the advertising team was affected by the most recent wave of layoffs. The initial round of layoffs affected the divisions of devices, recruiting,
and human resources. The second round affected employees in the advertising industry, cloud computing, Twitch live streaming, and HR teams.
Paul Kotas, senior vice president of advertising at Amazon, is said to have distributed an internal memo telling the staff of the layoffs. According to the company’s internal memo, “As Andy mentioned a few weeks ago, across the 2023 planning process, we’ve been selecting resources. It is done with a focus on the most beneficial benefits to consumers and the long-term health of our business.
For ads, the following process is required:
- reallocating resources by rearranging team members,
- halting or slowing down specific programs,
- concluding that they lacked the necessary expertise to address their priorities.
Hence, they have carefully analyzed their options and eliminated roles for a small portion of the organization.
The affected employees will receive full salaries and benefits for 60 days. It is given as part of the severance package. But affected New York and New Jersey workers will continue to get benefits for 90 days. Additionally, all affected employees will receive outplacement help to locate new employment.
Amazon closes Halo Health division
Besides terminating employees and closing the Halo Health segment, Amazon also offers hardware returns.
The Verge reported that Amazon’s decision to stop Halo operations resulted in job cuts. Amazon informed employees about the decision to stop selling Halo items. It was motivated by “growing competition and a volatile economic environment.”
Customers of Halo received a message from Amazon in April 2023. They informed them that Halo Health would be shut down as of July 31. The notice also includes information on layoffs and complete refunds for devices purchased in the previous year.
This includes the Amazon Halo View, the Halo Band, the Halo Rise, and many accessories. This is not a novel tactic. Google used one like it when it shut down Stadia. But it shows consideration for customers and a tacit admission that the hardware won’t be very valuable when the related services end. The business will also stop charging subscription fees and reimburse any advance payments made.
In a statement to “Halo Members,” Amazon writes, “In our efforts to please customers, we think big, experiment, and invest in new ideas like Amazon Halo.” All of the listed goods will stop working at the start of August. Also, Amazon has included instructions on recycling the hardware and saving scan images to a phone’s camera roll.
On the other hand, those affected by layoffs don’t have much notice.
“Today, we informed affected workers in the United States and Canada. We are adhering to local procedures in other regions. It can take longer to communicate with affected employees and allow time for discussions with employee representatives.”
They are offering compensation packages for affected employees. It includes external job placement help, transitional health insurance coverage, and separation payments.
The corporation announced 9,000 layoffs at the end of last month. Thus bringing the total to 18,000 since January. The first round unfavorable impacted Amazon’s hardware divisions, with the Alexa and Echo teams receiving a lot of attention.
When it was first unveiled in August 2020, the initial Halo tracker encountered opposition on privacy grounds.
In a recent annual letter to the company’s shareholders, Amazon CEO Andy Jassy talked about the 27,000 job cuts at the company. He stated, “We have carefully examined the entire company over the past few months. We did it business by business and invention by the invention, and we asked ourselves if we had trust in each initiative’s long-term potential to generate enough revenue, operating income, free cash flow, and return on invested capital. It occasionally caused us to close down specific firms.”
This was the largest mass layoff in Amazon’s history. Jassy thinks that despite this, Amazon still has its finest days ahead.