Bigger is not always better as Amazon CEO Andrew Jassy has discovered in his first year on the job.
The online retailer has too many warehouses, employees and until recently too many stores, but Jassy — who took the reins from the company’s billionaire founder Jeff Bezos last July — is on a mission to reshape the largest e-commerce business in the world, which has an excess of everything except sales and profits.
Bezos led the expansion boom during the pandemic, when the company was convinced consumers who’d migrated to online shopping during the height of COVID wouldn’t return to brick-and-mortar stores again, according to a Wall Street Journal report.
But after being locked down for two years, consumers are happily flocking back to stores.
Now, Jassy’s main focus is undoing much of the expansion.
“Following all that growth that we had in the short term, we have some things [Mr. Jassy] felt we need to do to get right in the business,” Patty Stonesifer, a longtime Amazon board member told The Journal. “And so he’s working on the supply, the labor and delivery speeds. He’s right in the middle of it.”
Jassy, who pulled in a whopping $212 million in total compensation last year, is under pressure after Amazon reported its slowest quarterly growth in two decades on April 28 — resulting in its first quarterly loss since 2015.
The company’s once-soaring stock price has fallen by more than a third under Jassy’s watch, wiping away more than $600 billion in market value.
All that growth – adding hundreds of new warehouses and doubling its workforce to 1.6 million employees – happened on Bezos’ watch, Amazon executives told The Journal.
To trim away the fat, Jassy in March shut down all of Amazon’s non-grocery stores — which consisted of 68 book stores, Amazon 4-Star and Pop-up shops.
Then in April, the company reversed course on more than 1,500 jobs it was planning to fill on the corporate side of retail and added a fuel and inflation surcharge for some Amazon sellers, according to the Journal.
Jassy also decided to sublease at least 10 million square feet of excess warehouse space and has delayed construction of new facilities, while he looks to renegotiate leases with outside warehouse owners.
“We’re very focused on profitability. I’m confident we’ll get back to a healthy level of profitability in our consumer business,” Jassy said at the company’s shareholder meeting in May. “We’re working really hard on it.”
