The job of Amazon CEO now includes “watching out so that Jeff Bezos doesn’t pull a Bob Iger.”
After Amazon’s retail business grew 39 percent in 2020, it decided to double its fulfillment footprint in 24 months. The aim was to add capacity quickly in case pandemic buying habits kept up. When that hope didn’t materialize, Amazon was stuck with excess space and costs. “We knew we might be overbuilding,” Jassy admitted
, but the company proceeded nonetheless. Rising inflation and an uncertain economy further complicated the decision, as people spent less freely on the site. Interest-rate increases then drove the market to demand maximum efficiency, leaving Amazon’s entire retail operation misaligned.Responding to Wall Street, Jassy conducted deep layoffs and looked to slim operations across the business. Amazon soon made plans to sublease its excess warehouse space and sought to use its existing space better.
. These challengers are effectively bringing many of the made-in-China brands on Amazon directly to consumers at a lower price, though with worrying labor practices. Amazon willThe Cloud Confronts a Storm In the zero-interest-rate era, companies would spend wildly on cloud services without much thought. “It wasn’t just capacity,” said Shmulik. “It was value-added services like ‘Oh, I want the platinum.’” Amazon Web Services’ customers believed the good times would roll on, that growth was inevitable, and that extra space or higher levels of services were worth the cost. No longer. As interest rates rose, companies looked for places to cut, and CFOs began scrutinizing the fancier AWS packages.
to build generative A.I. applications in AWS. This fight is in its in infancy, though, and how Amazon fares could meaningfully influence the company’s trajectory.
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