Dive Brief:
- Amazon has made meaningful progress in its financial measures and sees “considerable upside in each of the businesses in which we’re investing,” CEO Andy Jassy said Thursday in an annual letter to shareholders.
- The company views generative AI as a key foundational element of delivering better customer experiences and plans to deepen its investments in the technology. Jassy characterized generative AI as a building block that would serve as a foundation for new products and services.
- Amazon also said Thursday that Andrew Ng, the founder of several AI businesses and a managing general partner at AI Fund, is joining the company’s board of directors. Amazon said Ng “will help to inform the board’s perspective on the opportunities and challenges that AI presents and its transformative social and business potential.”
Dive Insight:
Under Jassy, who has led the company since mid-2021, Amazon has substantially reduced its headcount. Since late 2022, the retail giant has cut tens of thousands of jobs. Most recently, Amazon’s AWS unit confirmed earlier this month it was cutting hundreds of jobs, including “a few hundred” who were let go from its Physical Stores Technology team as it scaled back its Just Walk Out technology.
Earlier this year, the company cut about 30 people from its Buy with Prime staff, and late last year, several hundred were cut from Amazon’s Alexa unit. However, a large wave of layoffs came early in 2023, when 9,000 job cuts brought the total number of people let go over several months to about 27,000.
Jassy said the company continues operating “in times of unprecedented change” and sees several growth opportunities. He noted that while Amazon is a nearly $500 billion consumer business, about 80% of the worldwide retail market segment is still in physical stores. Similarly, Amazon sees opportunity for its cloud computing division as more businesses shift to the cloud.
He also described generative AI as possibly “the largest technology transformation since the cloud,” or possibly since the internet. Additionally, he said, “we’re optimistic that much of this world-changing AI will be built on top of AWS.”
While most of the public's attention has focused on generative AI applications, like ChatGPT, Jassy said in his nearly 5,500-word letter that Amazon is investing deeply in three layers of what he described as the GenAI stack. The top one is the application layer, which includes a substantial number of generative AI applications Amazon is building across its consumer businesses, including AI-powered shopping assistants, improvements in Alexa, better advertising capabilities and seller-focused applications.
“While we’re building a substantial number of GenAI applications ourselves, the vast majority will ultimately be built by other companies,” Jassy said. “However, what we’re building in AWS is not just a compelling app or foundation model. These AWS services, at all three layers of the stack, comprise a set of primitives that democratize this next seminal phase of AI, and will empower internal and external builders to transform virtually every customer experience that we know (and invent altogether new ones as well).”
As Amazon builds out its advertising capabilities, Prime Video also has the capacity to be a large, profitable business on its own, Jassy said. He pointed to continued development of exclusive content, like Thursday Night Football, growth in marketplace programs and the addition of advertising.
Delivery speeds and costs remain a priority. The company's inbound fulfillment architecture and inventory placement are areas of focus this year, Jassy said. Looking to the rest of this year and beyond, Jassy said Amazon will continue focusing on lowering its cost to serve.
Touting sales like Prime Big Deal Days, Jassy added that the company will continue to focus on being price competitive.
“Being sharp on price is always important, but particularly in an uncertain economy, where customers are careful about how much they’re spending,” Jassy said.
