Amazon finds itself over-extended and over-staffed

Amazon announces it will be laying off 18,000 jobs across the world in bid to slash costs - Economics Editor Joel Hills has the latest

Mighty Amazon has come unstuck.

Four years ago, Amazon became the most valuable company on the planet but in the last twelve months the company’s share price has been heading steadily south.

Amazon expanded its retail business aggressively during the pandemic. Fulfilment centres sprang-up everywhere in the push to cope with a surge in online orders during lockdown.

Globally, Amazon more than doubled its warehouse capacity and almost doubled the size of its workforce.

But lockdowns have now largely lifted, bricks and mortar is back in fashion and online spending has slowed in the face of high inflation.

Amazon now finds itself over-extended and over-staffed.

18,000 jobs are going worldwide, it’s not yet clear where, but back office managers rather than warehouse staff appear to be most at risk.

“This year will be a year of austerity for Amazon,” explains Marc Wulfraat of MWPVL. “Operating expenses desperately need cutting to rebalance the income statement. The whole of the retail business is losing money, even in the US.”

Some of the 75,000 people who work for Amazon in the UK may be affected by the decision to make redundancies but it’s worth remembering that the UK is an important market.

Wulfraat calculates that Amazon sells £367 of goods and services a year for every person living in Britain - that’s some distance behind the US (where the figure is £740) but significantly higher than in Germany (£327), France (£120) or Italy (£82).

It’s also worth remembering that Amazon much more than just a retailer.Amazon Web Services continues to make eye-popping sums of money, selling cloud computing to corporates.

If it weren’t for the performance of AWS, Amazon Retail would be in deep, deep trouble.

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