Amazon is still shaking up traditional logistics as we know it since we last spoke about it. Shortly after our last blog post about them, Amazon workers went on strike for Prime Day. Two months ago, Amazon workers walked out again for climate strike. Finally, last month Amazon announced they will be cutting ties with delivery companies linked to deaths resulting in more than 2,000 workers across eight states to be laid off. Yet, even with all these protests, walkouts, and bad publicity, Amazon has managed to stay in headlines of logistics news over new, exciting initiatives introduced this year.
Today, we’ll dive into the two highly publicized worker strikes Amazon experienced, the motivations behind them, and the new initiatives announced presumably as a response. We’ll also analyze the implication of the most recent mass lay off to hopefully answer the question: Is Amazon taking the right steps?
It is hard to discuss logistics news without acknowledging the omnipotent presence that is, Amazon. Amazon has grown from an online bookstore to an e-commerce dominator where the smallest changes sends tidal waves changing the landscape of all other e-commerce, retail, and logistics business everywhere. Let’s first talk about the July 16, 2019 Prime Day Worker’s Strike.
The Prime Day Worker’s Strike, though highly publicized, was not as successful as it was originally anticipated despite many social media posts from customers expressing that they would not divulge in the sale to stand in solidarity with Amazon’s employees. Prime Day is one of Amazon’s largest sale outside of Black Friday/Cyber Monday with the ability to rake in up to $5.8 billion, globally in one day. In the end, only 7 sites across Germany and Shakopee, Minnesota participated in the strike.
The motivation for these strikes were sound. Unions are much stronger in Europe, and German Amazon workers routinely strike during huge shopping events like Prime Day often because of low wages, inhumane working conditions, and almost impossible standards/quota. More than 2,000 workers participated. Minnesota’s motivation was more or less the same except Shakopee has a sizable group of East African Muslims as employees that claim even though they are federally allowed breaks for prayer, taking those breaks makes it extremely difficult to meet their quota. With Prime Day coinciding with Ramadan, most find it practically impossible to fast and pray in their work environment. It is already common knowledge that with low wages and individual religious practices aside, Amazon employees are often assigned so much work, it is already a difficult to find time to go to the bathroom without throwing their entire day completely off. Even with Amazon’s raise of “industry-leading pay” to $15/hour for all full-time employees, a lot of workers are still fighting for job stability and full-time status to receive that rate of pay. Almost all who participated in the strike had the time taken off from their allotted 20 hours unpaid time off, of which if they surpassed, is grounds for termination. Amazon went on record to say “roughly 15 associates” participated in the Shakopee protest though other news sources reported up to 78 participated.
In the end, the result of 2019 Prime Day Workers’ Strike barely put a dent in Amazon’s bottom line. Considering there was a workers’ strike last year, this year’s strike was further propelled by Amazon’s announcement of their one-day prime shipping.
Then, there was the thousands of Amazon employees that walked out for climate strike. Amazon is arguably one of the least sustainable companies because e-commerce is inherently less green than traditional retail stores because of transportation emissions. Amazon worsens it by utilizing van deliveries instead of full truckloads. Currently, none of the vans are electric either. However, strategically the day before the scheduled climate change strike, Jeff Bezos unveiled a climate plan for Amazon with the end goal of reaching net-zero carbon emissions by 2040 and purchasing 100,000 electric delivery vans starting in 2021. The question still stands: Is this enough?
Amazon has also since added an “Amazon Day” shipping option that allows the customer to select one day of the week to consolidate all their purchases throughout the week to deliver on the selected day with the least amount of packaging as possible for waste reduction. However, this is an opt-in service and not a default setting at check out. Yet, when customers choose to opt-in, they are eligible to receive digital credits.
While these two sustainable initiatives sound great, it Is also worth mentioning that earlier this month they have announced that $1 items can be delivered for free with this one-day shipping as well. Previously, an order that was under $25 was not subject for free prime shipping. That is all about to change with huge ramifications for one-stop grab-and-go retailers like drug stores. There are other implied ramifications…
On October 11, 2019 Amazon announced that they will be cutting ties with a few of their delivery-service partners (DSPs) because of deaths resulting in more than 2,000 layoffs. You can find the list of layoffs here. This does not come as a surprise since Amazon hold their DSPs to a standard of delivering an upward of 300 packages a day. This is not the first time Amazon has decided to terminate contracts with delivery firms on short notice. Amazon has disclosed that has around 800 delivery firms under contract and at least three Amazon DSPs have filed for bankruptcy since 2018. Since 2014, Amazon has contracted DSPs rather than hiring their own drivers and control a lot of the delivery process. That being said, they also deny any and all liability when people get hurt. It is speculated by Business Insider that “the layoffs could be a sign that Amazon is moving to rely more on these newer, smaller companies over its older partners.” However, smaller and newer 3PLs have no experience in delivering the quantities Amazon expects and may even rely on loans from Amazon to get started. Amazon essentially controls the financial wellness of all these 3PLs without ever being responsible to pay their DSPs’ drivers wages and benefits. This year in 2019, Amazon has become it’s own largest delivery provider surpassing even USPS.
It is an opinion that Amazon is trying to do too much at once. It’s hard to wrap your head around strategies for a such a large and wealthy company like Amazon. Seemingly all set goals are reachable but also….contradictory. It is possible for a company like Amazon to reach net-zero carbon emissions by 2040 since so many companies are already there right now. For example, Unilever, Apple, and soon, Ikea. However, I do tend to side with the opposing idea that it is not soon enough, and they should be pushing for 2030 especially with their recent introduction of $1 and one-day Prime shipping. Even though 100,000 electric delivery vans sound better than 20,000 gas powered delivery vans, their “Amazon Day” shipping is still not the default setting during checkout and the incentive to opt-in seems lackluster. It’s almost as if every time they find a solution for one hot button issue, they counteract it with another premium service literally nobody asked for. Their recent shift from older and larger partners to smaller 3PLs suggests their interest still lies in self-preservation and maybe to take advantage of smaller DSPs with their continuation of denying safety liabilities and exploitation of workers. Considering absolutely everything, Amazon must sort out its internal issues and focus on the wellness of their employees before trying to heighten their customers’ experience and expectations further.