Amazon Weighs Paring Back On Unprofitable Businesses Like Alexa; Introduces New Warehouse Robot To Cut Down On Lag

Amazon.com Inc AMZN has debuted a new warehouse robot that can pick up and sort millions of individual unpackaged products, likely to automate more jobs as it faces pressure to cut logistics costs significantly, the Financial Times reported. 

The group said the Sparrow robot is its first one with the capability to “detect, select, and handle individual products in our inventory.”

Amazon showcased Sparrow, a robotic arm that harnesses computer vision technology to identify and pick up small products, at an event in Boston on Thursday.

The e-commerce group said the robot would “benefit” its employees, who could now focus on less repetitive tasks in the company’s warehouses. 

Amazon created 700 new “categories” of jobs related to robotics.

Amazon CEO Andy Jassy currently led a cost-cutting review of the tech giant and paring back on unprofitable businesses, the Wall Street Journal reported.

As part of the monthslong cost-cutting review, Amazon has told employees in certain unprofitable divisions to look for jobs elsewhere.

Amazon’s leadership is closely evaluating its Alexa business which has more than 10,000 employees and is a major recipient of investment capital.

In October, Amazon warned that consumer spending was in “uncharted waters” as it issued revenue forecasts well below Wall Street expectations.

The poor retail performance has led Amazon to pause or cancel operating at least 50 U.S. warehouses. 

It has also reduced its workforce from 1.62 million in March this year to 1.54 million at the end of September.

The belt-tightening brings to an end two years of pandemic-fuelled investment in logistics. 

This year, Amazon said it had reduced its capital expenditure in logistics by $10 billion compared with 2021. 

Amazon last week announced hiring pauses for its corporate workforce.

Amazon first introduced robotics into its warehouses in 2012 with the $775 million acquisition of Kiva.

Sparrow uses seven suction cups at the end of a robotic arm to grab items, sorting products into tote boxes for transfer to the next step in the packing process.

“Robotics technology enables us to work smarter — not harder — to operate efficiently and safely,” wrote Joe Quinlivan, Amazon’s vice-president of global robotics, in a blog post.

Price Action: AMZN shares traded higher by 12.10% at $96.59 on the last check Thursday.

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