Shulou(Shulou.com)11/24 Report--

Beijing, Oct. 13 (Xinhua) for 25 years since it went public, e-commerce giant Amazon has adhered to a unique belief that growth is more important than profit.

Jeff Bezos is a risk-taking entrepreneur when Amazon founder Jeff Bezos sent his first letter to investors when the company went public in 1997, he set out the company's strategy to focus on long-term growth.

"We will continue to make investment decisions based on long-term market leadership considerations, not on short-term profit margins or the short-term reaction of Wall Street." He said.

Bezos has told shareholders to stick to long-term growth, but Amazon's tone has clearly changed after the first three quarters of this year. Against the backdrop of the global economic downturn, Amazon's sales have slowed and its shares have fallen 33% so far this year, surpassing the 25% decline in the s & p 500 and could be the worst year since 2008.

Amazon's new CEO, Andy Andy Jassy, took over from Bezos last July, but he seems to have forgotten the creed that Bezos adhered to. For now, he is in cost-cutting mode to maintain the company's cash flow.

For investors, Amazon's wave of frugality is strange to them, and they are more familiar with the expansion model. Amazon's workforce has ballooned from less than 650000 in 2018 to 1.6 million last year.

Bezos' strategy has been subverted? Amazon's recent belt-tightening trend raises a longer-term question, which comes at a time when Mr Bezos leaves, the first senior leadership change in the company's history. Mr Jassi's adjustment after taking office has prompted some analysts and former employees to wonder whether it is a permanent strategic shift under way or just a temporary reset that reflects economic uncertainty.

Mr Bezos has built up the image of an intrepid entrepreneur who is willing to make risky bets that may require huge investments and may not generate meaningful income for years. His biggest bet is Amazon's cloud computing service AWS, which was launched in 2006 and has been a success. Jassi led AWS until he was promoted last year.

Amazon's new CEO Jasi is slashing costs Bezos has launched projects in recent years including self-driving robot taxis, cashier-free stores and delivery drones, all to make life easier for customers.

He also cut a lot of products that were unsuccessful after release. Among them, the Fire Phone phone is one of the most notorious examples. This is Amazon's first smartphone, which was discontinued in 2015, a year after it went on sale. Other short-lived projects include restaurant takeout, social media streaming, a device that replenishes goods with one click, ticketing services, auction sites and online wine stores.

"they are not afraid to end unsuccessful products," says Craig Berman, a former vice president of global communications at Amazon. "it has never been a problem for them in the past."

AWS, a cloud computing service previously headed by Guan, Guan and Guan Jaxi, is Amazon's profit engine, providing ammunition for the company's investments in other areas. But since becoming Amazon's CEO, Mr. Jassi has had to cope with the biggest inflation in 40 years, supply shortages and an aggressive union movement that has challenged the company's long-standing anti-union stance.

In recent months, Amazon has shut down telemedicine, halted the sale of a children's video call projector, closed only one of almost all American call centers, disbanded delivery robot teams, closed underperforming physical chains, and is closing, canceling or delaying the opening of new warehouse facilities. Amazon is also considering significantly reducing the size of its secret laboratory Grand Challenge. On the recruitment front, Amazon froze corporate recruitment in its retail business.

Amazon disbanded Amazon's delivery robot team and held its annual hardware conference last month, which usually showcases gadgets and robots that don't necessarily exist a year or two later. However, compared with the previous launch activities, the scale of this event is obviously limited.

Taken together, Amazon seems to be more concerned about profit margins than ever before. " Tom Forte, an analyst at D.A.Davidson, an investment service, said he recommended buying Amazon shares.

On Monday, Amazon CEO Jassi spoke about recent efforts to control costs at a global staff meeting. " Long-term established and excellent companies always have this kind of twists and turns. For a few years, they will expand widely. For a few years, they will examine themselves, devote themselves to making a profit, and tighten their belts a little. Sometimes, when you have multiple businesses like Amazon, you will find that some businesses are expanding while others are examining themselves. " Jassi said.

Amazon is not the only company feeling the pinch. Meta, the parent company of Facebook, and Alphabet, the parent company of Google, are also cutting costs in response to a challenging macro environment and a sharp slowdown after a decade of sustained growth. Technology companies have announced layoffs, frozen hiring or lowered their hiring targets in the coming months.

Acquisitions keep going, but that doesn't mean Amazon has stopped all new spending. The company has been on a buying spree in recent months, agreeing to buy One Medical, a primary care provider, for $3.9 billion, iRobot, a maker of floor-sweeping robots, and Clostermans, a Belgian warehouse robot company, for an undisclosed amount.

Amazon also said it would spend about $1 billion in the coming year to raise wages and benefits for front-line employees and plans to hire 150000 workers to cope with the holiday shopping rush.

"We are investing in a lot of projects and will continue to do so," says Mr Jassi, citing areas where Amazon continues to invest, such as voice assistant Alexa, video service Prime Video and groceries. "during this time, our trick is to balance the long-term investments, bets and customer experiences that we think are the company's future, while really focusing on delivering on it."

More cost-cutting measures Amazon suffered its third consecutive quarter of single-digit revenue growth in July, mainly due to weaker demand from its core online store business. In the era of Bezos, Amazon was typically characterized by experimental high-risk investment. But now, Wall Street is not interested in this development model, and Jassi chose to cut costs at this time.

Mr. Jassi is also trying to shrink Amazon's expansion during the outbreak, which has burdened the company with too much warehouse space and employees. Amazon's headcount fell by 99000 to 1.52 million by the end of the second quarter. During the outbreak, Amazon's workforce almost doubled.

More austerity measures are in the pipeline. Amazon is currently working on annual planning, a two-stage process called "OP-1" and "OP-2". OP stands for "business plan". Former Amazon employees Colin Bryar Briya and Bill Carr described the process in their 2021 book reverse work: insights, stories and Secrets within Amazon.

Amazon shares have fallen this year 32%OP-1 usually starts in the summer and involves months of preparation and planning. Each team comes up with a proposal outlining the main plans for the coming year, including any funding or requests for new hires. OP-1 files are usually submitted before the start of the fourth quarter, which covers the most important holiday shopping season and is then reviewed by Amazon's senior leadership team, S-Team. The second phase of OP-2 will be carried out in January. This is when the team finalizes its annual plan and may adjust it according to its performance in the fourth quarter.

A former Amazon manager said in an interview that Amazon may consider further investment cuts if the holiday season is weaker than expected as the risk of recession rises. Another former manager of the company said that given the uncertainty, Mr. Jassi might consider which spending requests to approve more carefully, a sign of which areas Amazon plans to focus on.

A spokesman for Amazon said in a statement that the company continues to evaluate "the progress and potential of our products and services in creating value for our customers, and make regular adjustments based on these assessments."

Large-scale layoffs are unlikely, but even if Amazon cuts spending and shuts down some projects, the company does not expect large-scale layoffs. When Amazon closes a business, it usually provides employees with the opportunity to apply for jobs in other parts of the company, according to several former Amazon employees. They usually have a window of one to three months to find another job, during which time they have the opportunity to meet with business leaders.

"Amazon will not let the best people leave." Said Andrea Leigh, a former Amazon executive. She has worked at Amazon for nearly 10 years and has worked in a number of different businesses.

But Amazon employees could still lose their jobs. After Amazon announced that it would shut down its telemedicine service, Amazon Care, the company said it might lay off 159 employees. Another 236 employees from independent company Care Medical, which signed a contract with Amazon to treat Amazon Care patients, will be laid off.

One of the new inventions that Jassi may be able to count on to boost revenue is the second Prime Day promotion. This is the first time Amazon has held two discounts in the same year since the launch of Prime Day in 2015.

Amazon will release its third-quarter results later this month. Before that, the multi-day shopping campaign is likely to give Amazon an early glimpse of its operational prospects in 2023.

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