Big Year of Thinking Small: Amazon
All your online purchases during the pandemic have increased demand, which along with other economic forces has driven up prices. Costs have also become too high for the tech industry, prompting companies to scale back their ambitions even giant Amazon.
With an explosion of online shopping, boosted first by restrictions and then by stimulus money, the company's profits increased during the year. Amazon's growth stalled in mid-2021, and in early 2022 it posted its first loss in seven years. By November, Amazon was the first company in the world to lose trillions of dollars in value.
In the middle of last year, victims were also revealed elsewhere in the company. Amazon has closed all it's physical bookstores and Amazon Go convenience stores. Amazon Care health service was left behind because there was doubt it would ever be profitable.
But while consumption was still at an all-time high, Amazon spent the extra money on construction of warehouses and airports. It doubled its workforce from just under 800,000 employees at the end of 2019 to more than 1.6 million by the end of 2021. And it wasn't just about Amazon. Amazon layoffs relatively speaking, they represent the company's biggest workforce reductions since the 2001 layoffs, which hit 15 percent of the company's workforce.
But even if the money-laundering tech companies knew the inevitable crash was going to happen, they couldn't pass up the opportunity to grow and capture all of our shopping dollars.
Slowdown of Innovation
This decline has forced Amazon to scale back some of its big pet projects, like Alexa, where most of the layoffs have taken place. While Alexa-enabled devices like the Echo smart speakers and displays dominate the smart home market, they're losing money in price. And while Alexa has made great strides in voice recognition and AI-generated speech, the technology has failed to get people to buy with their voice.
Amazon health projects were also cut. Amazon Care, a service that offers telehealth and home doctors was shut down at the end of 2022. Amazon says it is moving forward with the purchase of One Medical which offers primary care clinics and telehealth services.
Amazon hasn't completely killed the Alexa division or its health services but the company will continue to invest in innovations like autonomous vehicles with its Zoox business. But the moves show that Amazon isn't ready to sink so much money into services to shake up or own the market. And like everything else at Amazon, when the company cuts money, it does so in a big way.