Big corps: reset now to diversify later?
As governments entirely lifted restrictions enforced during the COVID-19 outbreak, reopening brick-and-mortar stores contributed to a milder growth in e-commerce revenue. In the United States, the e-commerce share of total retail sales has slightly decreased since the first quarter of 2021 and a similar trend has been observed in the United Kingdom. As a result, a significant share of workers initially hired to cope with the unprecedented e-commerce growth has been dismissed.In the second quarter of 2022, the e-commerce behemoth Amazon downsized its headcount for the first time in two years – excluding the decrease over the 2020 holiday season. This added up to the strategic decision to sublet warehouse space, largely in excess once the online shopping surge faded. In turn, Amazon’s acquisitions strategy is livelier as ever, with plans to further expand in the realms of digital health and home appliances.
Shopify joined the e-commerce crunch wave, as it laid off 1,000 employees in July 2022. The company’s latest financial results suggest that e-commerce operations are shrinking, but also new investments are in sight. In July 2022, Shopify completed the acquisition of Deliverr – a San Francisco-based shipping and logistics network provider for marketplace sellers.
Savage competition in food delivery
Besides big marketplaces, online food delivery startups emerging from the last two-year thrive are already scaling back their activities, as increased fuel prices and lower consumer demand take a toll on their profits.Pushed by an initially rapid expansion, food delivery businesses struggled to keep expanding outside of their established markets in early 2022. This is the case of the massive layoff announced by Getir in May 2022, when over 4,400 people lost their jobs. Soon after, Gorillas let go of all 540 employees hired in Italy after deciding to focus on the five key markets generating 90 percent of its revenue. Likewise, the quick commerce newbie JOKR discontinued its recently launched activities in the United States.
In the uncertain scenario of economic recession, it seems unlikely that online grocery and food delivery platforms can maintain the high levels of profitability of the past two years, which justified the outstanding wave of investments they received until 2021.
