Amazon's Bold Moves: Cutting Costs Amid Growth and Innovation
1min read As of last week, Amazon (AMZN) saw a rise of 0.78%, extending a two-day streak for a cumulative gain of 1.69%. However, over the past week, the stock experienced a slight dip of 0.61%. Year-to-date, Amazon's value has increased by an impressive 23.62%, with a current market capitalization of approximately $1.97 trillion.
Recent developments indicate that Amazon is closing its same-day delivery service, Amazon Today, which was launched in 2022 to provide expedited delivery from select city stores and malls. The company plans to phase out the service, halting new developments and reducing operations by December 2, although some retail partners can continue fulfilling orders through Amazon Today until early 2025.
This decision is part of a broader cost-cutting strategy initiated by CEO Andy Jassy since 2022, reflecting the need to adapt to rapidly changing macroeconomic conditions. This strategy has resulted in Amazon undertaking its largest-ever layoffs, cutting over 27,000 jobs and discontinuing several projects including telehealth, children's video-calling devices, and the Treasure Truck service.
Despite these cutbacks, Amazon maintains its focus on investing in fast delivery capabilities and is collaborating with retail partners to ensure a smooth transition. The closure of Amazon Today seems surprising given the company's recent efforts to market the service to more retailers.
Amazon's long-term expansion strategy, driven by cost efficiency and AI investments, has recently resulted in achieving a "Davis Double" of profitability and valuation, pushing its market cap over $2 trillion. Amazon Web Services (AWS) remains a key profit driver, maintaining leading market shares in the global IaaS and PaaS sectors despite recent economic challenges.
The company's e-commerce division continues to dominate the North American market with a 40% share and a well-established logistics network, bolstering its competitive advantage. In response to intensifying cross-border e-commerce competition, Amazon is expanding into low-price markets, leveraging its full-support and pricing mechanisms to maintain its edge.
Additionally, Amazon has announced plans to build a new last-mile delivery center in Wichita Falls, Texas. This facility aims to enhance local infrastructure, catering to the anticipated rise in logistics activities after its completion.
