Andy Jassy’s Woe: Amazon Stock Cut In Half As Customer Satisfaction Falls – Forbes

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CULVER CITY, CALIFORNIA – AUGUST 15: (L-R) Andy Jassy, Amazon President & CEO and Elana Jassy attend … [+] the Los Angeles Premiere of Amazon Prime Video’s “The Lord Of The Rings: The Rings Of Power” at The Culver Studios on August 15, 2022 in Culver City, California. (Photo by Kevin Winter/Getty Images)
CEOs can’t alter the macroeconomy but they should control how their company adapts to its ups and downs. Indeed, an economic slowdown can be an opportunity for a CEO to take market share from weaker rivals.
If a company delights its customers by introducing exciting new products and providing great service, its market share will rise even as overall demand declines. If it fails to innovate and its customer satisfaction deteriorates, that company will lose market share to rivals who deliver expectations-beating delight.
This comes to mind in considering the many woes of Amazon CEO Andy Jassy. Since taking over the company from founder, Jeff Bezos, its share price has declined 51%, and as I wrote last month, its latest earnings report forecast record low fourth quarter growth of 5%.
Since then, Amazon began layoffs of some 10,000 workers — or 0.6% of its 1.54 million payroll and on November 21, the Wall Street Journal wrote that Amazon’s customer satisfaction is slipping.
Jassy is famous for his appetite for details so he is no doubt aware of the problems he faces. Can he solve them and reignite Amazon’s growth in the face of slowing consumer demand?
In order to gain market share, a company needs happy employees who are excited about getting and keeping customers. Evidence below suggests that the mood among Amazon employees and customers is not great.
Therefore, I expect its stock to keep falling before happy days return to Amazon.
It looks to me as though Amazon is cutting a small number of people in business lines that are unprofitable and in overhead areas in which people are not likely to be very busy.
Jassy sent out a memo last week that left it up to leaders in affected parts of its business to decide how many people to cut. While the New York Times NYT reported that the number of affected employees could total 10,000, Jassy’s memo made it clear that the layoffs would continue into next year, according to GeekWire.
Last week Amazon cut people “across the Devices and Books businesses, and offered voluntary reduction to employees in its People, Experience, and Technology (PXT) organization,” wrote GeekWire.
Macroeconomic factors outside of Amazon’s control are inhibiting demand for its products and services. As CFO Brian Olsavsky told analysts in its third quarter earnings call, “increased foreign currency headwinds, global inflation, fuel prices, and rising energy costs” are all inhibiting Amazon’s growth.
But these external headwinds are not the only thing cutting into Amazon’s success. Indeed, its devices team — including Alexa — where most of the layoffs happened — has lost billions of dollars due to what looks to me like mismanagement.
How so? According to BusinessInsider in the first quarter of 2022, Amazon’s Worldwide Digital unit — which includes the Echo smart speakers, Alexa and Prime Video — posted “an operating loss of over $3 billion.”
A former employee told BusinessInsider, “Alexa is a colossal failure of imagination. It was a wasted opportunity.” Other current employees said that over the last few years, the “team was deadlocked” due to “low morale, failed monetization attempts, and lack of engagement across users and developers.”
This does not bode well for Amazon’s efforts to create a faster-growing future.
While it is unclear whether the woes of the Worldwide Digital organization extend throughout Amazon, low employee morale would help explain why customer satisfaction with shoppers is dropping.
As the Journal reported, here are the customer satisfaction indices that have slipped:

An Amazon spokeswoman told the Journal that customers “are still highly satisfied with their experience, and [we have] worked in recent years to improve how customers find products on its website. [Our] delivery promises fluctuate because of factors such as time of day and customer location.”
Amazon says its phone answering is good. A spokesperson said the company “consistently exceeds its goals of answering at least 80% of phone calls in 60 seconds or less and responding to 80% of chat support requests within 30 seconds or less.”
Moreover, Amazon said that in recent months its shipping times have improved since the pandemic when the typical delivery time was six days. In recent months, Amazon says the averages have fallen to around two days.
Last week Jassy concluded his layoffs memo with enthusiasm for the opportunities in Amazon’s future. As he wrote, these growth opportunities reside “in its more established businesses like Stores, Advertising, and AWS [and in] newer initiatives such as Prime Video, Alexa, Kuiper, Zoox, and Healthcare.”
But Amazon — whose revenue bounded ahead at a 27% average annual rate between 2010 and 2021 — grew 15% in the third quarter and forecast a painful 5% rate of growth in the current quarter.
In the third quarter, Amazon put in a mixed growth performance in its business units. The good news was 7% growth to about $53.5 billion in online store sales and 25% growth to $9.5 billion in advertising.
Most ominous was slowing growth in AWS. While AWS sales rose 27% to $20.5 billion it was “one of the lowest rates of growth posted by the unit in recent quarters,” according to the Journal, and well-below the 31% growth rate expected.
At $136, the median analyst price target for Amazon suggests its shares are 45% under-valued.
MoffettNathanson analyst Michael Morton sees online shopping as more convenient and cheaper for consumers and with e-commerce representing 14% of the retail market, Amazon is best poised to take advantage of this opportunity, according to Barron’s.
BNP Paribas has a sell rating on the stock with a price target of $80. BNP’s Stefan Slowinski is concerned that AWS — Amazon’s “growth engine” — posted disappointing growth in the third quarter which added to his “concerns about their consumer business,” reported Bloomberg.
Slowinski is right. With unhappy employees and less satisfied customers, Amazon is not likely to gain market share as macroeconomic headwinds intensify.

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