Even with a series of project cuts, Amazon still can’t withstand the “cold” market!

Time flies. In July last year, Bezos officially stepped down as CEO of Amazon and was taken over by Andy Jassy. It has been more than a year since then. During this year, Amazon's development strategy has undergone earth-shaking changes. Is this Jassy's intentional move, or is it forced by the cold market?

Amazon is also hurt by the cold weather as its business scale continues to shrink

According to foreign media reports, Amazon is closing down Fabric.com , the online fabric business it acquired in 2008 .

Fabric.com is an online retailer that specializes in fabrics, decorations, concepts and other supplies. It has nearly 30 years of sales experience. Amazon said at the time of the acquisition that it would expand the product selection on the fabric website to provide customers with more sewing and craft supplies.

But Amazon recently announced the closure of this business. According to an announcement on F abric.com 's website , F abric.com will no longer sell products but will guide customers to shop on Amazon.

This is not the first business that Amazon has closed. In recent months alone, Amazon has cut its telemedicine services , children's video call projectors , delivery robots and other projects , closed some underperforming physical store chains , postponed and canceled the construction of some new warehouse facilities, and carried out large-scale layoffs of nearly 100,000 people .

There are also reports that Amazon is considering significantly downsizing its secretive Grand Challenge lab that does medical work .

DA   Davidson analyst Tom   Forte noted that Amazon now seems to be more concerned with profit margins than growth .

In the 25 years since its listing in 1997 , Amazon, led by Bezos, has always adhered to the single development strategy of " growth is more important than profit " . However, from July last year when Jassy took over as CEO to the end of the first three quarters of this year , the change in Amazon's strategic tone has become increasingly obvious, and its business has shifted from a crazy expansion mode to a contraction mode.

On the hiring front, Amazon has put a hiring freeze on corporate positions in its retail business.

At the end of September, foreign media reported that an insider revealed that in order to save office space rental and other costs, Amazon plans to close multiple call centers in the United States and encourage some customer service employees to work from home.

Although Amazon has not made a positive response to this, Amazon AWS recently reached a cooperation with tekVizion, planning to establish a conversational artificial intelligence service system and add a robot interactive voice response system to existing call centers.

In fact, in the context of slowing consumption and global economic turmoil , Amazon is not the only large company that is shrinking its scale to cut costs . Industry giants such as Shopify and Meta are also racking their brains to cut costs .

Jia Xi: Business adjustments are inevitable

In 2020, benefiting from the outbreak of the epidemic, online shopping has experienced unprecedented prosperity , Amazon 's overall revenue has also begun to soar rapidly, and its stock price has increased by 60%, and its golden age has arrived .

Just before Jassy took office in the second quarter of 2021, Amazon continued to receive good news. In just 15 months, it achieved the equivalent of three years of forecast growth and achieved the goal of quarterly revenue exceeding US$100 billion for the first time... Bezos also used this to put a perfect end to his time at Amazon.

After taking office, in addition to resolving the monopoly accusations from the European and American governments, Jassy faced a bigger challenge, namely how to solve the problems of overcapacity and huge cost pressures .

During the peak period of online shopping driven by the epidemic, Bezos led Amazon to carry out large-scale expansion, including repairing warehouses and hiring new employees . However , as the epidemic was brought under control and consumers returned to offline stores , the expansion during the epidemic became an excessive behavior, and its sequelae began to appear.

Therefore, after taking office, Jassy had to start Amazon's "frugality" mode.

Amazon's stock value has plummeted by more than 40% since Jassy took over as CEO. Its stock price has fallen 33% this year alone, exceeding the 25% drop in the S&P 500 and may record its worst year since 2008. Its market value has also shrunk by $ 656 billion .

In the first quarter of this year, Amazon's financial report showed that it had its first quarterly loss in seven years , with revenue growth of only 7%, the worst in the same period in about 20 years . Even in the second quarter, it had not turned a profit.

Revenue from Amazon's core online business actually fell 3% , and revenue growth in its subscription business, which includes its own-brand stores and includes Prime Video, also slowed.

In May, Jassy said at Amazon's annual shareholders meeting that the company is working hard to manage high costs related to high inflation and other factors such as supply chains , and he will focus more on restoring the company's " healthy " profit level . The series of strategic adjustments currently taken by the company have effectively reduced the cost structure, and he is full of confidence in the company's goal of getting growth back on track in the next two years .

The highest inflation rate in 40 years , supply shortages , union unrest , increased risk of economic recession ...all these crises are like Mount Tai pressing down on his head, but Jassy still has to bite the bullet and shoulder these "mountains of pressure". How to maintain market share, restore and improve profitability, and enhance the company's adaptability to the current market have become the top priorities of Jassy and Amazon .

In October, Jassy talked about cost control measures at Amazon's global all-staff meeting. He said that a company that focuses on long-term development will inevitably need to readjust its business at some stage , and Amazon is also working hard to improve profitability and reduce unnecessary costs.

Bezos: The risk of a U.S. recession is increasing , and all sectors should be prepared

It is not yet known whether Amazon's shift from expansion to contraction under Jassy's leadership is a permanent shift or a temporary measure to cope with the current economic downturn, but the signals of a global economic recession are becoming stronger and stronger.

Amazon is cutting costs , slowing spending and freezing hiring, all signs that the global economic situation may become more severe.

Taking the United States as an example, many American business leaders have recently issued warnings about the current state of the US economy .

A few days ago, Goldman Sachs Group CEO Solomon made some pessimistic comments on the US economy , saying that as high inflation continues and the Federal Reserve attempts to lower prices through a series of aggressive interest rate hikes, a US recession may be approaching, and US business leaders and ordinary investors need to be prepared accordingly.

On the same day , Amazon founder Bezos expressed his agreement with Solomon's views, saying that the various possibilities of the current US economy have reminded everyone to be prepared for the storm .

Federal Reserve officials have also acknowledged that tighter monetary policy could lead to a recession. The Fed estimated at its September meeting that U.S. GDP will grow by only 0.2% in 2022, and will rebound somewhat in 2023 , but only by 1.2% .

JPMorgan Chase CEO Jamie Dimon warned that the U.S. economy could fall into recession within the next six months.

A recent survey by the Wall Street Journal pointed out that nearly two-thirds of economists believe that the global economy will experience a recession next year . The latest survey by KPMG also showed that nearly 90% of CEOs around the world believe that the economy will decline .

It can be seen that the world's powerful economies, including the United States, may face a recession crisis. At that time, not only cross-border sellers, but every individual in the world, including companies, will feel the economic "cold".

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