In the latest sign of shifting priorities, Amazon has reportedly frozen corporate hiring in its retail operations

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Diving brief:

  • Amazon has frozen corporate hiring in his retail business until early 2023, The New York Times reported on Tuesday. The e-commerce giant did not dispute the report, but said it was still hiring in certain areas.

  • Amazon continues to have a significant number of open positions available across the company,” Amazon spokesperson Brad Glasser said via email. “We have many different companies at different stages of development, and we plan to continue to adjust our hiring strategies at each of these companies at various times.”

  • The company’s retail sales have fallen all year as spending has increased, helping push it into the red in the past quarter, and some analysts believe its Prime membership is showing signs of plateauing.

Overview of the dive:

Amazon has arguably been out of its retail business for a while, relying increasingly on more lucrative ventures than selling merchandise. In fact, for years, its third-party marketplace has been responsible for almost two-thirds of the merchandise sold on its site, with selling fees providing a rich source of revenue growth.

For even longer, its AWS cloud computing unit has been the company’s profit center. The company also has recently concluded agreements with other retailers to leverage its “just walk out” in-store payment technology. And advertising has become a vehicle for growth: Amazon executives said in JulyThe company is working on other ways to leverage ads, including through live streaming and streaming videos and music.

In its most recent trimester, ssubscription sales increased 10%, seller services revenue increased 9.1%, and advertising sales increased 17.5%, while retail sales fell 4.3%. The online retailer, which has relied on its annual Prime Day sale to fuel its membership base and boost sales, is holding a second such event for the first time this month.

The company earlier this year closed all 4-star bookstores and general merchandise stores. Its downsizing isn’t limited to brick-and-mortar retail, however, as the company canceled or delayed dozens of warehouses, just months after Amazon’s chief financial officer. Brian Olsavsky told analysts the company would mitigate the rising costs of its ambitious capacity expansion by expanding there as early as this year.

The retail hiring freeze could be a consequence of overhiring at the height of the pandemic, a corollary of overbuilding its warehousing capacity. According to Erik Gordon, a professor at the University of Michigan’s Ross School of Business, both were overreactions to what turned out to be an unsustainable increase in demand in e-commerce.

“They drew a straight line, when in fact that line stabilized,” he said by telephone.

But it could also reflect a sense at Amazon that its dramatic growth potential now lies outside of retail, in part because retailers have learned to compete. Thanks to BOPIS, buying locally, even for basic products, is often better than waiting for Amazon’s fastest delivery time; Meanwhile, many consumers won’t buy from Amazon when it’s important to find an item that is unique or, despite its efforts to fight counterfeits, authentic, he said.

Amazon isn’t quitting retail, but it isn’t excelling at it either, according to Paula Rosenblum, co-founder and managing partner of RSR Research.

“Amazon is a retailer, but not a particularly good one,” she said over email. “Admittedly, it was never profitable. AWS floats the business and the market helps stem the losses. At brick and mortar, I can be even more adamant…the company has no idea how to do this practically.