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Exclusive: Why Amazon cut hundreds of jobs

Amazon is working on the consolidation of Amazon Prime Now and AmazonFresh, which has caused layoffs in the company headquarters, Yahoo Finance has learned. The merger of these two consumer retail business units could eventually streamline a delivery experience for Whole Foods Market, which the company acquired last year.

The layoffs, first reported by the Seattle Times on Monday, affected “several hundred” employees. They were given 60 days to find another internal position before leaving the company, a source told Yahoo Finance. Though the e-commerce giant, which has more than 560,000 employees, very much remains in expansion mode.

“As part of our annual planning process, we are making headcount adjustments across the company — small reductions in a couple of places and aggressive hiring in many others,” an Amazon representative said in an email to Yahoo Finance.

The ongoing effort to combine Amazon Prime Now and Amazon Fresh is expected to be completed by the end of this year.

The merge may help deliver Whole Foods

Prime Now offers free two-hour delivery for Prime members. AmazonFresh is a grocery delivery service that charges Prime members an additional monthly membership fee of $14.99.

Back in 2007, Amazon started testing AmazonFresh in Seattle. Same-day and early morning delivery of fresh produce has been a major selling point for busy professionals in cities.

But the launch of Prime Now in 2014 made same-day delivery sound slow. As Amazon eyes consumers’ grocery baskets, there has been increasing amounts of overlap between the two delivery businesses. According to a recent survey conducted by Morgan Stanley, 48% of Prime Now users already order grocery items with it.

Following the acquisition of Whole Foods, Amazon began to scale back AmazonFresh in more than 10 states last year. The job listings page for AmazonFresh also shows signs of limited growth with only three openings.

The merger of AmazonFresh and Amazon Prime may help deliver more Whole Foods products to your doorway. (Getty Images)
The merger of AmazonFresh and Amazon Prime may help deliver more Whole Foods products to your doorway. (Getty Images)

Prime Now has expanded to a dozen metropolitan areas in the U.S. Last week, Amazon announced two-hour delivery from Whole Foods through Prime Now, which further stepped into the territory of AmazonFresh.

The merge started at the leadership level. Stephenie Landry, vice president and head of Amazon Prime Now, also leads AmazonFresh and Amazon restaurants, as reported by Recode last December.

And the combination of Prime Now and AmazonFresh could pave the way for further incorporations with Whole Foods. Greg Greeley, vice president of Amazon Prime and delivery experience has been assigned more responsibility at Whole Foods, according to CNBC. Upon the integrations, Amazon is likely to achieve a competitive advantage by leveraging Prime Now as the mechanism for the delivery of not only groceries, but also general merchandise from Whole Foods.

Amazon CFO Brian Olsavsky has previously signaled the possibility of the three businesses joining forces.

“Over time, you’ll see more cooperation and more working together between AmazonFresh, Prime Now and Whole Foods as we explore different ways to serve the customer,” he said on an earnings call last October.

Krystal Hu covers e-commerce for Yahoo Finance. Follow her on Twitter.

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