Plans are underway for Amazon to lay off 10,000 employees heading into the holiday season.
Amazon is planning to lay off about 10,000 employees in corporate and technology roles. The mass retrenchment, which is the largest in the company’s history, represents less than 1% of the tech firm’s global workforce and 3% of its corporate employees. The move would primarily impact its devices and retail divisions as well as human resources. The cuts are expected to begin this week and the total number of layoffs remains fluid, The New York Times reports.
While the news has not been confirmed by Amazon, mass job cuts at the company are in line with a spate of layoffs at other tech firms. Last week, Meta announced that it will be axing 13% of its staff or 11,000 employees. And Twitter retrenched approximately half its workforce in the days following Elon Musk’s $44 billion acquisition of the micro-blogging site.
The harsh job cuts across the tech industry come amid broader economic uncertainty and a sharp slowdown in the demand these companies experienced during the pandemic. At the time, they quickly added staff to keep up with customers’ needs. But in 2022, shares in Amazon have fallen more than 40% due to the significant market decline, CNN Business reports.
The news of significant job cuts isn’t too surprising since Amazon previously announced plans to freeze hiring for corporate roles in its retail business. The company shut down its health service in recent months, discontinued its video-calling projector for kids, closed all but one of its call centers, and canceled its roving delivery robot. The firm also closed underperforming brick-and-mortar chains and will be shutting or delaying various warehouse locations.
Amazon also reported disappointing third-quarter earnings in October that spooked investors and caused shares to sink more than 13%, according to CNBC. That was the first time the retailer’s market capitalization fell below $1 trillion since April 2020. Moreover, the report was the second time that the tech giant’s results sparked a double-digit percentage sell-off. The sell-off continued for days and erased almost all its gains from the pandemic surge.
At the end of 2019, Amazon had about 798,000 employees. But as of December 2021, the company reported a headcount of 1.6 million full and part-time staffers. Meanwhile, the holiday shopping season is critical for the retailer and is usually when the company would hire more people to meet demand. But that doesn’t look likely this year. CEO Andy Jass has been cost-cutting to preserve cash since he stepped into the role in 2021.
However, despite recession fears and inflationary pressures, the National Retail Federation is predicting a 6% to 8% sales increase during the holiday shopping months. This is positive news for Amazon and other retailers, as consumers remain resilient and continue to spend. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season,” NRF president and CEO Matthew Shay told CNN Business.
Online holiday shopping is also expected to increase by 10% and 12% – or between $262.8 billion and $267.6 billion, up from $238.9 billion in 2021. Hopefully, the added cash boost will help Amazon recover from its dire financial position.