Amazon‘s retail chief Doug Herrington cautions against one-sided cost-cutting, stressing the importance of balancing innovation with efficiency at the e-commerce giant.
“My suggestion would be for all the teams that if you find yourself only doing cost reduction with no invention and innovation, or if you find yourself only working on innovation and not thinking at all about how to become more efficient, then you probably don’t have the right balance,” Herrington said during a recent internal all-hands meeting, according to Business Insider.
The retail CEO’s comments come as Amazon continues its extensive cost-reduction efforts while simultaneously planning record capital expenditures of $105 billion in 2025. The company has laid off over 27,000 employees since late 2022, including about 200 workers from its fashion and fitness group last month.
Despite the ongoing cuts, Herrington emphasized the necessity of continued investment in new growth opportunities. “We have to keep reducing costs so that we can afford the big investments in big new businesses,” he said.
Amazon’s retail CFO Gail Carpenter reinforced this dual approach, describing the company’s cost-cutting measures as enablers for better customer experiences. “When we reduce waste and inefficiency, we can offer faster delivery, better prices, and expand selection in a profitable way,” Carpenter noted at the meeting.
The company’s strategy has focused particularly on improving shipping efficiency metrics. Business Insider reports that Amazon has successfully reduced its average cost-to-serve per unit over the past two years through investments in faster delivery and enhanced customer service.
Looking ahead, Herrington outlined continued investments in rapid delivery services, including same-day and drone delivery, while expanding product selection through services like Haul and Fresh Grocery. The company is also advancing its AI initiatives, such as the personalized shopping assistant Rufus.
