Dive Brief:
- Amazon is focused on increasing productivity within its operations after the e-commerce giant on Thursday reported a $2.7 billion loss for 2022.
- President and CEO Andrew Jassy told analysts on a Q4 earnings call that the company needs to increase productivity in the links between its sprawling fulfillment and transportation networks.
- “To figure out how to be really efficient across all those links and have them be highly utilized, and to get the flows in those facilities working in the right way — it takes time,” he said. “We're working very hard on it.”
Dive Insight:
After building out a massive operations and transportation network over the past few years, Amazon now needs to work out the inefficiencies in how the two link together.
“We took a fulfillment center footprint that we've built over 25 years and doubled it in just a couple of years,” said Jassy. “And then we, at the same time, built out a transportation network for last mile roughly the size of UPS in a couple of years ... And so there's a lot to figure out [on] how to optimize.”
Amazon reported a 9% net sales increase in Q4, though product sales fell 1.2% to $70.5 billion. The e-commerce giant remains determined to make up losses through a mix of productivity initiatives, layoffs and other cost-cutting initiatives.
Amazon has eliminated over 18,000 positions in human resources and within its stores and device businesses to help “streamline our cost,” Jassy said. Overall, the company turning its attention from expansion toward productivity as it looks to control spiraling costs across its network.
“Probably the #1 priority that I spent time with the team on is reducing our cost to serve in our operations network,” Jassy said.
Daphne Howland contributed to this story.
