Amazon's new strategy: We won't carry everything
That is among the pledges Amazon Chief Executive Jeff Bezos laid out Wednesday in a companywide e-mail, in which he also addressed the Seattle Internet retailer's recent decision to lay off 15 percent of its work force.
Separately, Amazon (amzn) Thursday canceled a plan to require laid-off workers sign a controversial "nondisparagement" agreement in exchange for a more generous severance package.
In Bezos' memo, the authenticity of which was confirmed by an Amazon spokeswoman, the executive summarized the plan to eliminate certain items on Amazon's online store as "Get the Crap Out."
"We'll ferociously manage the products we carry so that we sell only products that are profitable," Bezos wrote. "The thirty-pound box of nails isn't long for our world."
Although it originally established itself with its massive selection of books, Amazon has gradually sought to become a one-stop shopping destination for almost any consumer good imaginable, whether tools, lip balm, stereos or automobiles. Amazon's fierce commitment to selection has been criticized by many analysts, who have questioned whether the company can ever make money selling certain products, particularly cheaper, heavier items that are expensive to ship to consumers. Amazon's recent layoffs were part of plan to show a fourth-quarter operating profit.
"It's the smart thing to do," Lauren Cooks Levitan, an analyst at Robertson Stephens, said of Amazon's decision to weed out some items. "I don't need 50 choices of toasters."
The Amazon spokeswoman, Patty Smith, said the company in some cases won't eliminate unprofitable products, opting instead to package some items in a larger bundle. Smith wouldn't name the items Amazon plans to cut.
'Turbo-charge' and 'digital delivery'
Among the other plans contained in his memo, Bezos said the company would "turbo-charge" its core book business, an area where sales growth has slowed significantly in recent quarters. He said Amazon will begin selling electronic products in Japan and Europe this year instead of opening new country-specific versions of Amazon.
Bezos said Amazon would push new innovations on its Web site, including an undefined initiative he dubbed "Digital Delivery," which might refer to information-based products such as downloadable electronic books and digital music. Bezos also referred mysteriously to the upcoming launch of the "very promising Amazon.com Honor System." Amazon's Smith declined to clarify the initiative's nature, saying it will be announced soon.
Separately, Amazon Thursday sent an e-mail (see message) to customer-service workers in Seattle in which it said the workers could strike a nondisparagement clause from a larger separation agreement the employees are being asked to sign to receive a more generous severance package. The clause prohibited laidoff workers from criticizing Amazon to the press and others. Amazon said this week that it would shut down the customer-service center in Seattle as part of its restructuring plan.
The clause was criticized by union officials, who had been leading a drive to organize about 400 workers in Seattle. Smith said Amazon made the decision to eliminate the clause after complaints from employees. "We try to be responsive to employee's concerns," she said. "We felt we had made a mistake."
All hourly workers, including customer-service and warehouse workers, will be exempt from the nondisparagement requirement. However, Amazon's corporate staff will be asked to sign if they wish to receive the more generous packages.
At 4 p.m. in Nasdaq Stock Market trading Thursday, Amazon was down $1.06, or 6.1 percent, at $16.25.