Amazon warehouses are in crisis due to staff shortage

This year, Amazon moved its Prime Day promotion event forward to June. As a result, its international sales (excluding North America) grew 35.5% in the second quarter, and North America grew 21.9%. Compared with the sales level when the epidemic was severe last year, the growth rate has slowed down.

Moreover, as the global epidemic situation gradually improves, more and more people are choosing offline shopping, and the entire consumer market is recovering to its pre-epidemic state. Against this background, Amazon is still facing warehouse emergencies and staff shortages, and will spend billions of dollars to expand its warehouse area and logistics distribution system.

The problem of insufficient storage and staff has existed for a long time

Last year, Amazon refused to accept sellers’ goods for several weeks because of a lack of storage space and qualified staff. Andrea Leigh, a former Amazon employee, mentioned that “Amazon lacks storage space and does not have enough staff, and Amazon has been working hard to solve this problem.”

Although Amazon has taken precautions, doubling the size of its warehouse and transportation network in the past 18 months and spending a lot of money to hire and train new employees, it still cannot meet demand.

The tight labor market has forced Amazon to raise wages and add signing bonuses to attract full-time and part-time employees. According to the editor, Amazon currently has about 1.335 million employees.

In addition, Amazon also needs to get its one-day delivery service for Prime members in the U.S. back on track. Its chief financial officer Brian Olsavsky said, "Amazon membership is an extremely important part of our multi-year investment chain."

Since Amazon launched the Prime membership one-day delivery service in the second quarter of 2019, its sales have increased dramatically. According to this situation, the editor believes that after Amazon launches holiday delivery, its sales will reach a new high.

Amazon is increasing its current investments to gain long-term benefits

According to international logistics consulting firm MWPVL, Amazon will add 517 global distribution infrastructure points in the next few years, which means it will add another 176 million square feet of warehouse space to its 402 million square feet.

Amazon did not respond to requests for comment on the accuracy of these estimates, but said its infrastructure projects are already underway. In the past 12 months, Amazon's capital expenditures and equipment leasing expenses rose 74% to $5.45 billion, a significant increase from last year.

Sacrificing short-term profits for long-term benefits seems to be Amazon's usual trick for 27 years. "Slowing growth and increased investment make Amazon's stock more challenging," said analysts at Morgan Stanley.

Credit Suisse analysts also mentioned that "this is normal for a retailer with a market value of $1.7 trillion and will continue to grow. Amazon's increase in capital expenditure is more important than its current revenue data."

In general, I think Amazon and consumers have always been mutually beneficial. Amazon can only achieve greater development by constantly solving problems and providing customers with more convenient and considerate services.

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