Amazon is facing a difficult year ahead as it reported its first annual loss since 2014. Chief Executive Officer Andy Jassy got on the post-earnings analyst call himself to address the tepid start to the new year. With the economy recovering due to stimulus-rich consumers, Amazon is facing increased competition from rivals like Walmart and social media platforms like TikTok. The company is now focusing on cutting costs and squeezing efficiencies from its retail and logistics networks to catch up to its competitors.
Right-sizing the business is critical for Amazon as it faces growing competition from social media platforms and Walmart closing the gap with bigger online investments. To do this, Amazon has been cutting back on its hardware and retail businesses, shutting dozens of sorting facilities, and closing all of its non-grocery physical stores. The company has also been focusing on its grocery business with discounts for Prime members and a focus on Whole Foods stores.
In the short-term, Amazon faces an uncertain economy and is focused on cutting costs and leveraging efficiencies from its sprawling retail and logistics network. To succeed, the company may have to think like a retailer instead of a tech company and continue to invest in its grocery business, especially with high-income shoppers feeling the pinch of inflation. Without this, Amazon may be entering “Day Two” sooner than expected.