Unconfirmed reports Monday that said Amazon is planning to cut up to 10,000 jobs could give Walmart an opportunity to retake some market share from its struggling retail rival.
The cuts are broad although not especially deep, given that the company has 1.5 million workers across the globe and are reported, thus far, to be confined to the devices and retail organizations.
The retail division, which accounts for roughly 50% of consolidated revenues, per Amazon’s filings, is home to at least some of the firm’s logistics operations. And it may be the case that the company is digesting some of its logistics buildouts, anticipating demand that may not be in the cards.
The throttling back on staffing comes as the company has been reconsidering its physical footprint. As noted here earlier in the fall, Amazon has, in 66 cases this year, either closed existing facilities or canceled the opening of previously planned ones.
Amazon did not respond to PYMNTS request for comment or confirmation of the reported headcount reduction.
Some Excess Capacity
During the company’s first quarter earnings call, CFO Brian Olsavsky noted that there was “excess capacity that we need to grow into” and added that “now we work on getting productivity up. It’s a combination of productivity at the employee level, but it’s also a matter of productivity … and harmonization of the network, having the right capacity and the right demand matched at the warehouse level and the transportation node level.”
The cuts at the device-level, if we could call it that, may have implications for the connected economy longer term. Reports earlier this month said that Amazon is considering “whether” to add new capabilities to Alexa, which hints that that they may not be as ambitious as some observers may have thought they’d be in connecting voice commands to devices to shopping to media to … well, you get the picture.
But more immediately, into the next quarter and what some fear is a recession, Walmart’s own job cuts so far have been relatively tame. The company said over the summer that it would cut 200 corporate employees, indicating it feels it is relatively right-sized for a tough operating environment.
All of this opens the door, at least a bit, for Walmart to make some gains against Amazon, at least over the next few months.
PYMNTS’ research has detailed that we’re seeing a bit of blurring of the lines in commerce, where Walmart wants to take a bit more eCommerce share of consumers’ wallets, and Amazon of course has Whole Foods and has experimented with various physical offerings.
Logistics (and not just the last mile) is a key component here, making sure that the right item is available through the channel that’s desired (and here, in brick and mortar, Walmart has an edge). A visit to a Walmart store might be part of a buy online, pickup in store encounter; the great reopening may also see a boost to foot traffic on premise.
In many ways, the race is neck and neck. Amazon’s gross sales in the United States have increased from $117 billion in Q2 2021 to $131 billion in Q2 2022. This represents a year-over-year increase of 11.5%. Walmart’s gross sales in the United States increased from $118 billion in Q2 2021 to almost $129 billion in Q2 2022. This represents a year-over-year increase of 8.9%.
At the moment, Amazon’s belt-tightening looks more severe than its key rival, and headed into what increasingly feels a recessionary environment, the company has already guided to low single-digit growth while it focuses on some internal retooling. Amazon’s pullback may be Walmart’s gain.