The report: Amazon plans to replace more than 500,000 jobs with robots as part of its effort to speed up deliveries and cut costs, per The New York Times.
The context: Amazon’s US workforce has more than tripled since 2018, but since late 2022 the company has shifted its focus toward streamlining operations and reducing expenses, leading to thousands of layoffs.
- That shift has accelerated Amazon’s push into automation. The company’s robotics division estimates it can eliminate the need to hire more than 160,000 US workers by 2027, saving about 30 cents per item picked, packed, and shipped.
- At its new generation of ultra-fast delivery centers, Amazon is working to drastically reduce human labor, with internal documents outlining a plan to automate up to 75% of operations. Its flagship facility in Shreveport, Louisiana, offers a glimpse of that future: Once an item is packaged, humans rarely touch it again. The warehouse’s 1,000 robots allowed Amazon to cut staffing needs by 25% last year, and the company expects to halve them next year as automation expands.
- Amazon plans to roll out the Shreveport model to roughly 40 more sites by 2027, starting with a new Virginia Beach facility.
- Even as Amazon expects to double product sales by 2033, executives told the board last year that it could roughly maintain its current US headcount, effectively eliminating the need to hire over 600,000 additional workers.
It’s worth noting that despite its ambitions, Amazon currently continues to need a lot of workers to meet demand; The retailer is hiring 250,000 workers this holiday season, the same number it brought on each of the past two years.
Our take: Amazon is accelerating its use of automation to improve efficiency, speed up deliveries, and cut costs.
The strategy targets what matters most to shoppers: 1 in 5 consumers say delivery speed is the most important factor when buying online, per a recent Ipsos survey. By shifting to a system powered more by machines than people, Amazon can save money on every package, strengthen its price advantage, and widen the gap with competitors. Faster, cheaper fulfillment also helps Amazon tighten the link between click and doorstep, reinforcing a long-term edge in US ecommerce that few rivals can match.