News of layoffs generally indicates a floundering business, which made reports early this week about job cuts at Amazon all the more confusing. After all, the retail giant is doing anything but struggling, what with its Whole Foods acquisition, new delivery business, and the search for its second headquarters. But now, we’ve learned more about the reasoning behind the layoffs, and it appears to be an effort to consolidate Amazon Prime Now and AmazonFresh. In merging these two units, the company hopes to “eventually streamline a delivery experience for Whole Foods Market,” Yahoo Finance reported.
The layoffs were initially brought to light in a piece by the Seattle Times, and will affect “several hundred employees” at the Seattle headquarters, as well as “hundreds more elsewhere” across Amazon’s global offices. The news was especially surprising given how lean Amazon already runs its operations, and considering the amount of revenue the company brings in on an annual basis. That said, Amazon has indeed rapidly hired across its Seattle office, growing its employee base by 800 percent — in 2010, just 5,000 people worked at its headquarters. Today, that number stands at over 40,000 people.
In a statement to the Times, Amazon noted, “As part of our annual planning process, we are making head count adjustments across the company — small reductions in a couple of places and aggressive hiring in many others. For affected employees, we work to find roles in the areas where we are hiring.”
Some of those roles might be in the new combined Amazon Prime Now and AmazonFresh department. The merger of the two units is expected to be completed by the end of 2018, and marries two of the company’s most popular offerings. Prime Now allows Prime members to get deliveries in just two hours, while AmazonFresh is the company’s grocery delivery service. But more and more (and understandably so), customers are looking to get their fresh produce delivered as fast as possible, which means that there’s quite a bit of overlap between the two services.
The decision to merge the two units doesn’t really come as a surprise. Last December, Recode reported that Stephenie Landry, the vice president and head of Amazon Prime Now, would also be leading Amazon Fresh. Amazon CFO Brian Olsavsky has noted that various departments within the company could be joining forces. “Over time, you’ll see more cooperation and more working together between AmazonFresh, Prime Now, and Whole Foods as we explore different ways to serve the customer,” he said on an earnings call last October. Now, that cooperation is coming to fruition.
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