UPDATED 13:18 EDT / NOVEMBER 10 2022


Amazon reportedly launches extensive cost-cutting review

Amazon.com Inc. has launched an internal review focused on finding opportunities to reduce expenses, the Wall Street Journal reported today.

Sources familiar with the matter told the Journal that the review is being led by Amazon Chief Executive Officer Andy Jassy. According to the sources, the initiative is “much more extensive” than a similar effort to optimize costs that Amazon launched in 2017. The new cost review is said to encompass several parts of the company’s business operations.

One of the business units on which Amazon is reportedly focusing as part of the initiative is its devices division. The division posted an annual operating operating loss of $5 billion multiple times in recent years, according to today’s report. It’s believed that more than 10,000 employees work at Amazon’s device business, which is responsible for the development of its Alexa-powered smart speakers and other products such as the Kindle e-reader. 

Amazon has reportedly suspended or shut down multiple teams at some of its unprofitable business units. Employees from those teams, which focused on areas such as robotics and retail store operations, are being moved to other parts of the company.

Amazon’s logistics unit, which is responsible for processing purchases made through its e-commerce marketplace, is also a focus of the cost review. The company reportedly placed an “added emphasis” on finding cost-cutting opportunities at its logistics unit. As part of the effort, Amazon is working to more effectively use its delivery trucks’ cargo capacity.

“Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review,” an Amazon spokesperson told the Journal in response to today’s report. “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”

Amid the cost review, Amazon is reportedly continuing to invest in business units where it has identified growth potential. Those business units are said to include the company’s healthcare division. Earlier this year, Amazon inked a $3.9 billion deal to acquire One Medical, a primary healthcare provider incorporated as 1Life Healthcare Inc. that went public in 2020.

Amazon joins a growing list of major tech companies that have launched cost reduction initiatives in recent months. In many cases, those initiatives have involved workforce reductions or hiring slowdowns. Meta Platforms Inc. on Wednesday let go more than 11,000 employees, while Apple Inc. and Google LLC earlier scaled back recruiting efforts. 

Photo: Amazon

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