Amazon shuts down private label stores

E-commerce giant Amazon has announced a significant strategic shift, ending its operations from private-label market stores including Amazon Fresh and Amazon Go. The company will prioritize expanding its ultra-fast delivery services, promising deliveries within 30 minutes, and is also implementing cuts to its corporate workforce.

Restructuring of Physical Retail

Amazon is abandoning its private label market stores, Amazon Fresh and Amazon Go, citing the difficulty in creating a distinct customer experience with a scalable economic model.The company plans to convert an unspecified number of these stores to the Whole Foods Market format it acquired in 2017. Despite this pullback in physical grocery retail, Amazon intends to open more than 100 new Whole Foods stores in the coming years, including the smaller store format, Whole Foods Market Daily Shop.

Bet on Ultra Fast Delivery

Instead of relying on private label brick-and-mortar stores, Amazon is doubling down on ultra-fast grocery delivery.The company has launched a same-day delivery service that has grown rapidly to more than 5,000 locations and is testing a 30-minute delivery pilot program in Seattle and Philadelphia.This strategy aims to capitalize on the growth of the everyday essentials segment, which is growing nearly twice as fast as the rest of the business.Even without its own-brand stores, Amazon is already one of the largest grocery retailers in the country, with annual sales exceeding US$ 100 billion.

Corporate Cuts and Internal Restructuring

Alongside the restructuring of its physical retail operations, Amazon is experiencing a wave of cuts in its corporate workforce. Thousands of jobs are expected to be eliminated, following an earlier cut of 14,000 positions in October.These cuts, which affect departments such as Amazon Web Services, retail and human resources, are attributed by some to broader restructuring and increasing automation driven by artificial intelligence.However, CEO Andy Jassy indicated that staff reduction is also linked to a simplification of the company's internal bureaucratic structure.

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