After hiring hundreds of thousands of people during the epidemic, Amazon.com Inc. now confronts a dilemma: how to reduce its headcount to meet slowing e-commerce sales growth without igniting labour unrest and giving unions more firepower.
When the world’s largest online retailer announced profits on Thursday, it admitted that it had added extra logistical capacity to match a rise in demand from homebound consumers, but that it now has too many employees and too much warehouse space.
The corporation lost money in the prior quarter, had the worst sales increase since 2001, and warned that revenue and profitability will suffer in the current period as buyers returned to their pre-outbreak buying patterns.
In response to the epidemic, Amazon doubled the scale of its logistics network in only two years, outpacing rivals and partners such as Walmart Inc., United Parcel Service Inc., and FedEx Corp.
For a time, the Seattle firm was opening a new warehouse every 24 hours or so someplace in the United States.
Many investors thought that after the pandemic-related stresses subsided, Amazon would be able to ramp up earnings because the business had lots of additional space and could reduce expenditure on new facilities.
Amazon, on the other hand, overbuilt and is now faced with expenses that are outpacing demand.
On Friday, the stock fell more than 10% in one day, the largest intraday drop in more than a decade, prompting several analysts to slash their price estimates.
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