Amazon’s Great Cleanup Continues: A Million Charities Are Coming Out – Business AM

Busy laying off workers, Amazon is going through a bad patch. This time, the e-commerce giant is not saying goodbye to employees, but to more than a million charities.

Why is this important?

Like other Big Techs, Amazon realizes that it had eyes bigger than its stomach during the pandemic. In one year, its market capitalization has melted by almost 40%. Consequence: the e-commerce giant wants to reduce its costs.

In the news : AmazonSmile is (soon) over.

  • This Wednesday, Amazon announced that it would end AmazonSmile, its charity support program.
  • According to the company, this decision is made because the initiative has not had the expected impact.

The detail : 400 million in ten years.

  • AmazonSmile will permanently close its doors on February 20.
  • This site allowed Amazon customers to shop there as on the classic platform, while allocating 0.5% of the amount spent to a non-profit organization of their choice.
  • Launched in 2013, AmazonSmile has donated hundreds of millions of dollars to US charities.
    • The exact numbers seem uncertain, with AmazonSmile reporting $377 million donated worldwide here and Amazon giving $400 million to US organizations alone here, while several US media reports a figure of $500 million.
    • The press release announcing the closure of AmazonSmile does not provide any figures.
  • As compensation – if that term can be used – participating organizations will receive a donation from Amazon equivalent to a quarter of the money they received in 2022 through the platform.
    • On average, this should work out to around $50 per association.

Reduce costs at all costs

The explanations : “not enough impact”, but above all need money.

  • On its blog, Amazon explains that “the program has not grown to create the impact that we had originally hoped for”. “With so many eligible organizations – over a million worldwide – our ability to make an impact was often too limited,” adds the firm.
  • Amazon assures that it will continue to donate to charities despite the closure of AmazonSmile.
    • “We will continue to pursue and invest in other areas where we have seen we can make meaningful change, from building affordable housing to providing computer access to teaching science for students. from underserved communities to using our logistics infrastructure and technology to help vast communities impacted by natural disasters,” Amazon writes.
  • However, given recent decisions by Amazon, there is every reason to believe that AmazonSmile is closing so that the company can recover some money.
    • For one, Amazon will no longer have to allocate 0.5% of purchases to participating organizations.
    • On the other hand, as noted TechCrunchthis will allow Amazon to lay off some of the staff who worked specifically for AmazonSmile.

The context : biggest wave of layoffs in history.

  • In early January, Amazon announced the layoff of 18,000 employees worldwide. This is the biggest job cut ever by the e-commerce giant.
    • This is an extension of the 10,000 layoffs announced last November.
    • “I’m hopeful that we will be inventive and arm ourselves in this period where we are not hiring on a large scale and where we are eliminating certain functions,” said Andy Jassy, ​​CEO of Amazon. “Companies that last for a long time go through different phases. They are not in recruiting mode every year. »
  • While Amazon saw its stock market value dip below $1 billion in mid-fall (it’s currently $957 million), the company reported operating profit of $2.5 billion in the third quarter of 2022.
    • Its results for the last quarter will be announced within two weeks.

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