Amazon’s workforce shortage hampers overnight delivery ambitions

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An Amazon delivery man pulls a delivery cart full of packages during his annual Prime Day promotion in New York City, United States, June 21, 2021. REUTERS / Brendan McDermid

LOS ANGELES, Oct.28 (Reuters) – Labor shortages have curtailed Amazon.com Inc’s (AMZN.O) plan to establish a one-day delivery standard for its club members from Prime loyalty, thus delaying its attempt to consolidate its lead in e-commerce and shipping costs which explode before the all-important holiday season.

The comments from the world’s largest online retailer come as staffing emerges as a big issue for U.S. retailers, who are already battling supply chain grumbles, product shortages, the rise in inflation and soaring transport costs.

Seattle-based Amazon said it was forecasting $ 4 billion in additional labor and related spending during the fourth quarter, amid pandemic-fueled shortages that made it harder to hire employees. ‘warehouse workers and drivers, and forcing him to move packages to the gap. warehouses with sufficient staff.

In April 2019, Amazon announced it would roll out overnight delivery to Prime subscribers, and it said it would cost the company $ 800 million in the second quarter of 2019 alone. faster has forced Walmart Inc (WMT.N) and other retailers to speed up delivery and invest in e-commerce offerings, increasing competition.

Amazon continues to charge $ 119 per year for a US Prime membership, which includes shipping.

Amazon CFO Brian Olsavsky said on Thursday: “We have unfinished business on the promise of a day side. We did increase that in 2019 and in the first quarter of 2020 before the pandemic,” he said. he said, referring to One Day Delivery. “We are still not back to the levels we saw before the pandemic.”

Olsavsky said labor constraints “haven’t helped us close the gap” by offering Prime customers one-day default shipping, but the company was hoping for an improvement next year.

‘CANNOT CONTROL IT’

As shoppers resume spending on entertainment and travel, Amazon faces stiff competition not only for the share of the wallet, but for employees as well.

Michael Pachter, analyst at Wedbush Securities, said Amazon has no choice but to pay for workers because it needs warehouses near high-cost urban centers to ship goods within a day to the workers. customers nearby.

“Their sales are in population centers, which means they usually have to pay competitive salaries,” he said. “They really can’t control it. The model is, order from Amazon and you’ll get it soon.”

Companies in the retail sector are also struggling to find workers to do physically demanding warehouse jobs, especially when restaurants, stores and entertainment venues are rehired. In New York City, some Amazon warehouse workers are pushing for more wages and protections thanks to a potential union vote.

Drivers are also wanted.

This week, three Amazon delivery service partner (DSP) drivers told Reuters they got a higher salary. Two used FedEx offers to further solicit their existing DSP employers. Another driver hopped on United Parcel Service (UPS.N), a union store known for having some of the best wages and benefits in the industry.

Amazon has previously said it plans to add 150,000 seasonal jobs in the United States, where bait for warehouse workers and other roles includes an average starting salary of over $ 18 an hour and connection bonuses of up to $ 3,000.

Reporting by Lisa Baertlein in Los Angeles; Editing by Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

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