Shifts in Amazon's focus evident as retail division announces hiring pause

In a recent financial update, Amazon reported a mixed bag of results for its third quarter. While the company's subscription sales, seller services revenue, and advertising sales saw impressive growth of 10%, 9.1%, and 17.5% respectively, its retail sales took a hit, declining by 4.3%.

The retail sector has been a challenging one for Amazon, with the company facing stiff competition from local shopping options that offer Buy Online Pickup In-Store (BOPIS) services. This preference for shopping locally has taken a toll on Amazon's retail sales, which have been on a downward trend throughout the year.

However, Amazon's cloud computing unit, Amazon Web Services (AWS), continues to be a profitable area for the company. AWS has been the company's profit centre, offsetting the losses in the retail sector.

To mitigate costs and grow into its capacity expansion, Amazon's Chief Financial Officer, Brian Olsavsky, has stated that the company will focus on expanding its capacity as early as this year.

In a bid to boost its retail performance, Amazon has been striking deals with other retailers to leverage its "just walk out" in-store payment technology. Unfortunately, the details of the recent companies that Amazon has partnered with for this technology have not been disclosed.

Amazon has also been exploring new avenues for advertising, with plans to introduce livestreaming, video, and music streaming ads. This shift towards advertising is in line with the company's executives' statements that advertising has emerged as a growth vehicle for Amazon.

Despite the hiring freeze in its retail business, Amazon is still hiring in certain areas. However, the company has shuttered all its bookstores and 4-star general merchandise stores.

Paula Rosenblum, co-founder and managing partner at RSR Research, noted that Amazon isn't particularly good at retail. Despite this, Amazon isn't leaving the retail business, but it hasn't excelled at it either, according to Rosenblum.

Amazon's annual Prime Day sale is being held for a second time this month, offering customers discounts and deals on a wide range of products. The company's third-party marketplace, which is responsible for nearly two-thirds of the goods sold on its site, is expected to play a significant role in this sale.

In conclusion, Amazon's Q3 results show a company that is navigating challenges in the retail sector while finding success in other areas, such as advertising and cloud computing. The company's focus on cost mitigation and expansion, as well as its exploration of new avenues for growth, will be key to its future performance.