Hundreds of Amazon Fresh grocery store workers were told this week that they were losing their jobs, even as the company tries to expand its grocery business.
Workers who were responsible for managing sections of individual stores – otherwise known as "zone leads" – were told Tuesday that their roles were being permanently eliminated as part of a cost reduction plan, three former Amazon Fresh employees, whose identities have not been revealed, told The Washington Post.
The workers were told not to report to work after Tuesday, but they will still be compensated for 60 days, sources told the outlet.
Amazon spokesperson Jessica Martin told FOX Business that the company is restructuring the in-store staffing and operations model for its Amazon Fresh stores.
"Like any retailer, we periodically assess our stores’ organizational needs and make decisions to increase efficiencies for our employees and deliver customer value," Martin said. "As a result, we’ve decided to evolve our in-store staffing and operations model to better serve our customers and teams."
Staff members that have been affected can apply for another position or accept a severance, according to Amazon.
Amazon CEO Andy Jassy has been trying to figure out a winning formula for its Amazon Fresh grocery business, which he admitted isn't as far along as they would have hoped.
Jassy told analysts during an April earnings call that while the company has tried many ideas, it hasn't yet "found conviction around the format that we want to go expand much more broadly."
Jassy said the company has a "set of experiments and ideas and concepts" that it's working on at these stores. He is also hopeful that the company will figure it out "over this next year."
In order to gain dominance in the sector, Jassy said there needs to be a lot of brick-and-mortar locations, which the company has been working on with Amazon Fresh for a few years.
"We have to have a bigger physical presence since most of the shopping visits are still physical stores," Jassy said, adding that "if you really want to serve as much of grocery as we'd like to, you have to have a mass physical offering."
Still, the company is making progress. Its physical store sales grew by 7% on an annual basis during the first quarter.
To date, there are more than 40 Amazon Fresh locations across the U.S. as well as over 20 Amazon Go stores and more than 530 Whole Foods Market Stores, which Amazon acquired in 2017.