Amazon sucks up Roomba-maker iRobot for $1.7B

Amazon announced that it has entered into an agreement to acquire the vacuum cleaner maker iRobot for approximately $1.7 billion.

It’s a move that will allow Amazon to scoop up another company to add to its collection of smart home appliances amid broader concerns about its market power. iRobot sells its products worldwide and is most famous for the circular-shaped Roomba vacuum.

Amazon says it will acquire the company for $61 per share in an all-cash transaction that will include iRobot’s net debt. The deal is subject to approval by shareholders and regulators. Upon completion, iRobot’s CEO, Colin Angle, will remain in his position.

Critics are already discussing the new data that Amazon will be collecting through these devices. It’s a move that could create concerns for some consumers, who might already be weary of Amazon’s data collection capabilities.

“The one big downside comes from privacy concerns. While Amazon does not use data in a malicious way, some people will worry about how much data is being gathered about their homes and lives through the presence of a greater number of smart devices,” GlobalData Managing Director Neil Saunders said in emailed comments. “Amazon will need to work hard to satisfy both consumers and regulators that it is doing right by the increasing volume of personal information it has at its disposal.”

Source: CBC
Source: Bloomberg
Source: Retail Drive

Amazon Shrinks Workforce by 100,000, as Hiring Freezes and Layoffs Hit the Tech Sector

Amazon.com Inc. was one of the latest company to discuss its belt-tightening efforts. During its quarterly earnings call, the e-commerce giant said it’s been adding jobs at the slowest rate since 2019. After relying on attrition to winnow its staff, Amazon now has about 100,000 fewer employees than in the previous quarter.

Amazon said in April that it was overstaffed after ramping up during the pandemic and needed to cut back. “As the variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” chief financial officer Brian Olsavsky said at the time. Amazon has been subleasing some warehouse space and paused development of facilities meant for office workers, saying it needed more time to figure out how much space employees will require for hybrid work. The company now has 1.52 million full- and part-time workers and is still the largest employer in the tech world, despite the reduction in headcount.

Source: Financial Post

Amazon Slows Network Expansion in Response to Cooling Customer Demand

Highlights:

  • Amazon has slowed its operations expansion plans for this year and 2023 “to better align with expected customer demand,” CFO Brian Olsavsky said on the e-commerce giant’s Q2 earnings call.
  • A glut in fulfillment capacity was part of the $6 billion in added costs the company saw in Q1, along with inflationary pressures and less productive warehouses. The company has since made progress in reducing those costs, which settled in at $4 billion in Q2. Olsavsky said that was in line with Amazon’s expectations.
  • “We expect fixed cost leverage to improve in the second half of the year as we continue to grow into our capacity,” Olsavsky said. “We’ve also taken steps to slow future network capacity additions.”

Insight:

Amazon had accelerated the growth of its distribution network to meet heightened demand in 2021, with fulfillment and transportation capacity being the focus of more than half of its total capital investments, according to Olsavsky. Now, the company is slowing supply chain investments as it sees slowing revenue growth and declining sales.

Net sales at Amazon’s online stores fell 4% year-over-year. The company expects 40% of capital investments in 2022 to be focused on warehouse or transportation capacity, down from 55% in 2021.

Amazon also saw a $2 billion net loss in the quarter following a $3.9 billion pre-tax valuation loss from its investment in Rivian, which is producing 100,000 custom-made delivery vehicles for Amazon.

A strong fulfillment network is still a critical component of Amazon’s business. Olsavsky noted that third-party sellers represented a record 57% of all units sold on Amazon in Q2 and that “Fulfillment by Amazon provides sellers the ability to offer fast delivery.” The company saw a quarter-over-quarter improvement in delivery speed, he added.

Amazon has also grappled with excess employees in its fulfillment network. The company hired additional workers to fill in for those sidelined by the omicron variant earlier this year, but warehouses became overstaffed after the variant’s spread subsided. Amazon adjusted staffing levels in Q2, Olsavsky said; the company’s employee headcount fell 6% from the previous quarter. “I would note that we’re still up 188,000 [employees] year over year and nearly double the headcount of what we had heading into the pandemic in early 2020,” Olsavsky said.

Source: Retail Drive