Amazon will cut 18,000 jobs in the largest round of blackouts in its history as major tech companies prepare for the global economic slowdown.
Amazon’s CEO, Andy Jassy, confirmed the extent of the layoffs Thursday morning, blaming the “uncertain economy” and overhiring during the pandemic.
The online retailer said the business will expand into its “stores” business, which includes its online retail division and its stores operating in real space. While digital sales have slowed since Covid restrictions eased, the company’s newly opened high street stores were unable to break the traditional brands’ dominance over shoppers.
It will also reduce in-house tech teams. Mr Jassy also confirmed redundancies in the hardware business, which includes the Alexa-powered team of Echo smart speakers and the book section.
Employees will be told on January 18 whether their jobs are at risk. The company said the cuts included teams in Europe.
Mr Jassy said companies are no longer “in heavy human expansion mode this year” amid the economic gloom. He said the company will focus on “simplifying” to understand “what matters most to customers.”
In recent years, Amazon has spent billions of dollars and hired tens of thousands of people amid the surge in demand for online shopping during the pandemic.
It’s also spent money on innovation, with thousands of people working exclusively on Alexa AI and smart speakers. The company expanded into grocery stores, challenging high street stores like Tesco.
However, while Alexa has proven popular with consumers, it has largely failed to recoup its investment in Amazon. The company’s grocery stores have also failed to break the traditional brands’ dominance over shoppers.
Amazon was among the worst affected companies in a tech valuation last year. It lost $200 billion in a record-breaking one-day loss in October after telling the stock market that it expects growth to slow.
Amazon employs more than 1.6 million people worldwide, so the layoffs announced Thursday are only a small fraction of its employees. Most of these are staff in supply centers or logistics departments, including temporary or seasonal workers.
Tech companies are rapidly changing direction after hiring so quickly during the pandemic. Last year, Facebook laid off 13 percent of its employees, while Elon Musk’s Twitter cut headcount by more than half.
Valuations at major tech companies fell last year. Amazon’s share fell nearly 50 percent in 2022 and was valued at approximately $870 billion.