Amazon's retail CEO tells employees more cost cuts are needed to afford 'big investments in big new businesses'

Core Insights - Amazon's retail CEO Doug Herrington emphasizes the necessity of cost-cutting to fund new growth opportunities, indicating a dual focus on efficiency and innovation [1][10] - The company has been actively reducing its cost-to-serve metric, which measures the fulfillment cost of shipments, by eliminating inefficiencies in the delivery process [2][9] - Amazon's ongoing cost-cutting measures have led to record profits and cash reserves, allowing for significant investments in AI data centers and efficient delivery systems [4][3] Cost-Cutting and Investment Strategy - Herrington stated that cost reductions and new investments should be complementary, aiming for a balance that drives efficiency [5][6] - The company has laid off at least 27,000 employees since late 2022 and closed several less profitable services, which has contributed to its financial success [3][4] - Amazon plans to invest a record $105 billion in capital expenditures by 2025, focusing on areas like fast shipping and improved customer service [4][10] Operational Improvements - Herrington highlighted the importance of improving delivery efficiency, which has been achieved through investments in faster shipping options and better customer service [2][7] - Amazon's retail CFO Gale Carpenter noted that recent investments in warehouses have reduced transportation costs by serving smaller regions, thus enhancing overall efficiency [8][9] - The company has successfully improved its average cost-to-serve on a per-unit basis for two consecutive years and aims to maintain this momentum into 2025 [9][10]