Amazon Web Services is laying off several hundred employees as the company shifts its strategy in some parts of the business, a spokesperson confirmed Wednesday.
The job cuts will affect several hundred people from the sales, marketing and global services team for AWS, the company’s cloud computing division. The cuts will also affect a few hundred roles from the AWS physical stores technology team.
“We’ve identified a few targeted areas of the organization we need to streamline in order to continue focusing our efforts on the key strategic areas that we believe will deliver maximum impact,” an Amazon spokesperson said. “These decisions are difficult but necessary as we continue to invest, hire and optimize resources to deliver innovation for our customers.”
It’s not yet clear how the layoffs will affect Amazon’s workforce in Seattle and Bellevue.
Amazon went through a wave of cost-cutting efforts in late 2022 and early 2023 that resulted in at least 27,000 job cuts companywide. Since then, it has continued targeted layoffs, including cuts to Prime Video and Twitch, its livestreaming service. In February, Amazon also made cuts to its health care teams, including its pharmacy operation and One Medical, the primary care provider Amazon acquired in 2022.
Amazon is still hiring for some roles within AWS, the spokesperson said Wednesday. Employees affected by the layoffs will receive 60 days of pay, severance and transitional health benefits.
Within the AWS sales, marketing and global services team, the spokesperson said, Amazon found duplication in some roles. It also shifted to prioritize self-serve digital training and delivering instructor-led training through AWS training partners. In the physical stores technology team, the decision is part of a strategic shift in how Amazon uses some applications in its own stores and third-party stores.
In February, Amazon reported AWS sales increased 13% to $24.2 billion in the last three months of 2023 from the same period a year earlier. Chief Financial Officer Brian Olsavsky said at the time the company had seen customers start to shift away from cost optimization and toward pursuing projects that had been put on hold as inflation and pandemic shortages led many companies to tighten their belts.
Amazon noticed that shift across its broader business as well, as it exceeded analyst expectations and its own estimates for the fourth-quarter and full-year earnings from 2023.
Last year, Amazon reported $30.4 billion in net income, up from a $2.7 billion loss in 2022. For the fourth quarter of last year, it reported $10.6 billion in net income, up from $300 million in the same time period a year ago.
The layoffs announcement comes a day after Amazon confirmed it would no longer use Just Walk Out technology in its Amazon Fresh grocery stores. That service used a network of sensors and cameras to track what items shoppers put in their cart and bill them as they left the store, eliminating the need for a checkout line.
Now, Amazon says it will replace that technology with smart carts that still allow customers to skip the checkout line, but also show them their spending in real time.
On Wednesday, Amazon also told employees it would permanently close its Fresh grocery store on Pike Street in Seattle’s Capitol Hill neighborhood, part of a broader shift in grocery strategy.
