Amazon has been on a rough ride since Bezos left

Few investors or analysts expressed considerable alarm when Amazon revealed only about two years ago that founder and then-CEO Jeff Bezos would hand the reins over to former cloud chief Andy Jassy.

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Jassy, a close confidant of Bezos, was known as an Amazon lifer and a celebrated figure both within the company and throughout the industry since he founded Amazon Web Services, which grew to become one of the most valuable companies in the world. Wedbush analysts virtually yawned at the transition, claiming it would be "seamless and largely irrelevant."

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Unfortunately, Jassy's brief time in charge has been rather eventful.

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After Bezos' official turnover to Jassy in July 2021, Amazon has gone through its most difficult time since the dot-com bubble burst. Jassy has had to lead Amazon through several cost-cutting initiatives that nobody anticipated would be necessary when business was growing through the Covid epidemic, as last year marked its slowest year for sales growth as a public firm.

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Since July 5, 2021, after Jassy took over as CEO, Amazon stock has fallen by 44%. In addition to the 18,000 job cuts announced in January, Jassy stated on Monday that the corporation is axing an additional 9,000 positions. Despite making up a small portion of Amazon's corporate personnel, the layoffs are still stunning news for a business that has spent the greater part of 25 years experiencing constant expansion.

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In an email to staff members, Jassy stated, "Given the uncertain economy in which we currently reside and the uncertainty that remains shortly, we have chosen to be more streamlined in our costs and manpower.”

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Jassy's adverse circumstances are mostly the result of unlucky timing; historically high inflation forced the Federal Reserve to boost interest rates, which severely hampered growth in the U.S. tech sector. Yet as only the second CEO in Amazon's history, Jassy is in an unfortunate situation, whether it's due to bad luck, his errors, or a combination of the two.

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His predecessor, Jeff Bezos, turned Amazon from a small bookstore into a retail, cloud computing, and advertising behemoth that gained a reputation for having a creative, startup-like environment. Under Bezos' leadership, the business produced revolutionary products like the Kindle e-reader and the Echo smart speaker and made investments in new industries including original content, healthcare, and physical grocery stores.

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The Jassy era has so far been all about tightening the screws and backing away from some of Amazon's riskier ventures.

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Jassy has been reducing costs at the company for the past year. Many unproven bets were dropped, including Amazon's Scout delivery robot, a virtual tour service, the Care telemedicine program, and a kid-friendly video conferencing device. Bezos said earlier this year that Amazon would close select Fresh supermarkets and Go cashier-less convenience stores, as well as all of its 4-star, Pop Up, and Books businesses. One of Bezos' pet initiatives, drone delivery, is having a very difficult time taking off due to cost reductions.

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Between 2020 and 2022, Amazon's physical footprint was forced to double by the e-commerce boom brought on by the epidemic. Both the stock and the employee count increased. But, as the economy recovered and online sales stagnated, Amazon discovered that it had more facilities than it could effectively employ. As a result, it decided to close, postpone, or cancel the development of numerous new warehouses.

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Amazon halted work on the second phase of its massive new facility in Arlington, Virginia, known as HQ2, earlier this month. Additional building projects in Bellevue, Washington, and Nashville, Tennessee, have also been postponed, in part since a large portion of Amazon's corporate employees has been working remotely since the outbreak.

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Jassy is under intense pressure to demonstrate that he can keep costs in check. Yet he will eventually need to identify fresh sources of growth if he wants to rekindle the passion that Bezos instilled in Amazon's culture.

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Amazon just managed to turn a profit in its fourth-quarter earnings report, and the business provided a poor forecast for the first quarter, with revenue growth anticipated to remain in the mid-single digits.

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It's not precisely what Bezos had in mind when he informed staff of the impending CEO transition in early 2021.

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Amazon "couldn't be better positioned for the future," Bezos wrote at the time in a letter to employees. "We are operating at full capacity, precisely as the world needs us to. Things that are coming up will continue to astound.”