Bigger isn’t always better, as Amazon CEO Andrew Jassy discovered during his first year on the job.
The online retailer has too many warehouses, employees and until recently too many stores, but Jassy – who took the reins from the company’s billionaire founder Jeff Bezos last July – is on a mission to reshape the most largest e-commerce company in the world, which has an excess of everything but sales and profits.
Bezos led the expansion boom during the pandemic, when the company was confident that consumers who migrated to online shopping during the height of COVID would no longer return to physical stores, according to a Wall Street Journal report. .
But after being locked down for two years, consumers are happily flocking to stores.
Now Jassy’s main goal is to undo much of the expansion.
“After all this growth that we have had in the short term, we have things [Mr. Jassy] felt we had to do to get into the business,” longtime Amazon board member Patty Stonesifer told the Journal. “And so he works on sourcing, labor and delivery times. He’s right in the middle of it.
Jassy, who took home $212 million in total compensation last year, is under pressure after Amazon reported its slowest quarterly growth in two decades on April 28, resulting in its first quarterly loss since 2015.
The once-booming company’s share price fell by more than a third on Jassy’s watch, wiping out more than $600 billion in market value.
All of this growth — adding hundreds of new warehouses and doubling its workforce to 1.6 million employees — happened on Bezos’ watch, Amazon executives told the Journal.
To cut the grease, Jassy closed all of Amazon’s non-grocery stores in March – which consisted of 68 bookstores, Amazon 4-Star and Pop-up shops.
Then, in April, the company reversed course on more than 1,500 retail jobs it planned to fill and added a fuel and inflation surcharge for some Amazon sellers, according to the Journal.
Jassy has also decided to sublet at least 10 million square feet of excess warehouse space and has delayed construction of new facilities, as it seeks to renegotiate leases with outside warehouse owners.
“We are very focused on profitability. I am confident that we will return to a good level of profitability in our consumer business,” Jassy said at the company’s shareholders’ meeting in May. “We are working very hard on it.”