A Blog by Jonathan Low


Sep 15, 2020

The Reason Amazon Is Hiring 200,000 More Workers As Pandemic Demand Grows

Amazon lost market share in the spring and early summer due to inventory stock-outs and delivery delays.

It does not want that to happen during the upcoming holiday season so is hiring substantial numbers of workers early. JL

Hamza Shaban reports in the Washington Post:

The latest hiring drive is the fourth Amazon has initiated this year. All told, they add up to 308,000 positions. Amazon said in its most recent earnings report that net sales jumped 40%. In the early months of the pandemic, as consumers stocked up, Amazon was rocked by shipping delays and depleted inventory. Walmart and Target filled some of that void, using their bricks-and-mortar locations (for) pickup and e-commerce shipping.As a result, Amazon’s share of the U.S. online retail market fell from 42% in January to 38.5% in June.
Amazon said Monday it will hire another 100,000 workers to meet surging demand in the covid-19 era, bolstering an already dramatic expansion of its workforce this year and underscoring the massive shifts in online spending the pandemic has helped fuel.
The latest hiring drive, which includes full- and part-time jobs, is the fourth large campaign the Seattle-based retail giant has initiated this year. All told, they add up to 308,000 positions. By comparison, Amazon said it employed 798,000 Americans at the end of 2019. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

Competition among major online retailers has intensified as many Americans adapt to a prolonged period of working from home, and consumers look to online shopping to replace visits to the store. But in the early months of the pandemic, Amazon was caught flat footed. As consumers rushed to stock up on cleaning supplies, home office equipment and recreational goods, Amazon was rocked by shipping delays and a depleted inventory. Walmart and Target were able to fill some of that void, using their bricks-and-mortar locations as pickup depots and e-commerce shipping hubs, exploiting the legacy of an established physical presence.

As a result, Amazon’s share of the U.S. online retail market fell from 42.1 percent in January to 38.5 percent in June, according to data from Rakuten Intelligence. Walmart increased its position from 2.2 percent to 3.5 percent, and Target boosted its share from 3.5 percent to 5.0 percent.
“Despite their profits, I thought the company’s in-stock performance and delivery standards were terrible in many cities, and I didn’t think they were particularly great to their front-line workers,” said Paula Rosenblum, an analyst for Retail Systems Research in Miami. She added that the company is bracing for some portion of employees to be out sick from covid-19 and other illnesses, and is preparing for a potential blowout holiday season.
“Let’s see if they can recoup the business they gave away to Walmart, Target and Kroger.”

Sucharita Kodali, a retail analyst at Forrester, said Amazon hires 100,000 to 200,000 more workers every holiday season. While it’s unclear how many of the people brought on during the coronavirus crisis will remain permanent employees, she said the latest expansion seems in line with its traditional end-of-year boost.

Amazon’s growth stands in contrast to what is playing out in the larger retail sector, which has seen more than a dozen large brands file for bankruptcy since the pandemic started six months ago and ushered in a recession. Several well-known brands, including Lord & Taylor, Modell’s, Stage Stores and New York & Co., are shuttering all their stores. Those that do survive will be leaner: The Gap announced it would shutter 200 locations, while Ascena Retail Group — the parent company of Ann Taylor, Lane Bryant and Justice — is closing nearly 1,600 stores while in bankruptcy. Overall, a record 25,000 stores are expected to disappear this year, according to Coresight Research.
Amazon said in its most recent earnings report that net sales jumped 40 percent, to $88.9 billion from $63.4 billion in the year-ago period. It also doubled its profits, leaping from $2.6 billion to $5.2 billion during the months of April, May and June, as the coronavirus continued to spread across the country.

Amazon has faced criticism from workers rights groups and staff in recent months, including some who have complained of intense and unsafe working conditions during the pandemic, and allegations that the company fired workers for speaking out.
Amazon contends that the employees were dismissed for violating internal policies. Earlier this year, hundreds of Amazon workers staged a virtual rally, protesting what they said were unethical working conditions.
Investors expect Amazon, like the other mega-tech companies with trillion-dollar market values, to emerge from the pandemic even stronger. But Amazon’s dominance also has attracted more scrutiny from Washington. In a recent Congressional hearing featuring Big Tech’s chief executives, lawmakers spent much of their time pressing the head of Amazon. Members of Congress paid particular attention to the power dynamic between the company and its third-party sellers, which both rely on Amazon’s marketplace and in many instances must compete with Amazon’s own goods. The hearing marked the first time Bezos testified on Capitol Hill.


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