Amazon is doing well, but could it be better?
PUBLISHED April 23, 2020
The e-commerce giant is raking in sales and hiring thousands as warehouse workers walk off for the third time. Something needs to change, experts say.
If there was a time for Amazon to shine, a pandemic that has forced the temporary closure of nearly all physical stores would seem to be it.
Instead, on Tuesday, just days after CEO Jeff Bezos published his latest letter to shareholders, Amazon warehouse workers in the U.S. planned to walk off the job for the third time, due to what the Retail, Wholesale and Department Store Union (RWDSU) called "the company's lack of safety protocols during the COVID-19 pandemic."
That is just one way the e-commerce giant has faltered. While at first e-commerce seemed to be the automatic, almost magical solution to the problem of closed stores during the pandemic, that notion was quickly debunked. Even Amazon scrambled to fulfill online orders of household essentials and other items needed by people who were suddenly confined to their homes for pretty much everything.
Amazon took the unusual step of temporarily blocking the intake of some types of inventory to its warehouses. Its much touted one-day Prime shipping became a far-off notion. Amazon has also scrambled to tamp down on price-gouging by some of its sellers, stating that there is a zero tolerance policy and it is continuously monitoring its stores "through both automated and manual means and aggressively removing bad actors and offers."
It's not all terrible, especially considering the struggles of so many retailers during the crisis. The company is demonstrating operational prowess at an unprecedented time, and even an unusual level of transparency, at least with its sellers, according to Fahim Naim, a former category manager at Amazon and now founder and CEO of e-commerce growth consulting firm eShopportunity. "I think they've done pretty well in the U.S.," he said in an interview. "Certainly, communications with vendors and sellers has never been Amazon's strong suit. But they were upfront and very specific. It was pretty good from them."
That's shown up in its superior results in different measures. In the aggregate, for example, Amazon customers these days are spending nearly $11,000 each second, according to GlobalData analysts. In emailed comments from April 17, they also noted that the e-commerce giant's share price rose 5% from a previous high to $2,283 per share. Meanwhile, the company has had to hire thousands more workers to keep up with demand. And Prosper Insights & Analytics found that a year-over-year bump in U.S. Prime memberships to 52.4% from 45.2% in April last year "may be due to online shopping during COVID-19."
Still, while few analysts believe that Amazon is badly stumbling, some do believe there's room for improvement. And not of its shipping speed.
"Amazon has done well in this crisis," GlobalData Retail Managing Director Neil Saunders said in a phone interview. "The website hasn't fallen over, the logistics hasn't fallen over, and to keep something at that scale going is monumental. People like Amazon because it delivers to them, and because it fulfills great services. What Amazon isn't good at is the emotional side. Part of it is because Amazon is remote and doesn't run stores, but also because of how it's run. It isn't really run, in a way, by humans. The system knows where everything is, the humans don't."