Logistics sector eyes Amazon retail job cuts with concern

Amazon's plans to lay off around 10,000 corporate and technology jobs – 3% of its workforce – has sparked concerns it is set to begin axing roles in logistics.

The layoffs represent less than 1% of Amazon’s global work force of more than 1.5 million, which largely comprises hourly workers.

The current cuts are focusing on Amazon’s devices division, including it’s struggling Alexa device, as well as in human resources, an anonymous source told the New York Times.

Amazon making cuts to shrinking Retail division

The source also revealed Amazon is planning major cuts to its retail division, which is responsible for online shopping, physical retail and a chunk of the firm’s logistics operations. 

Amazon has scaled back its logistics operations in recent months, reports logistics news service, Freightwaves. The company has delayed, or is closing, 60 warehouses, as well as scrapping services like free Whole Foods delivery, and its Scout home delivery robot as it contends with slowing e-commerce growth.

Like many businesses, Amazon is struggling in the face of soaring inflation and rising interest rates. This economic headwind has also combined with a post-pandemic shift away from e-commerce and back towards shopping in stores, which has seen a slowdown in Amazon’s core retail business.

There is concern in the wider logistics sector that Amazon’s shrinking retail operation might have a knock-on effect on Amazon Freight, a third-party logistics operation that in the UK and Europe alone, runs a network of 6,500 trailers and 13,000 carrier partners. 

What has surprised industry watchers most is that the planned layoffs come at the beginning of peak holiday season, a time of year that typically sees Amazon scale up seasonal hiring to meet increased demand. 

The cut-backs come in the wake of disappointing Q3 earnings from Amazon, whose  shares fell by 13% in when the company issued a dampened Q4 forecast, and also missed Q3 revenue estimates.