OM in the News: As Country Shuts Down, Amazon Hires Up
Amazon plans to hire an additional 100,000 employees in the U.S. as millions of people turn to online deliveries at an unprecedented pace and Americans continue to reorient their lives to limit the spread of coronavirus. It will deploy the new workers to fuel its e-commerce machine and is raising pay for all employees in fulfillment centers, transportation, stores and deliveries in the U.S. and Canada by $2 an hour. (Amazon now pays $15-per-hour as a starting wage and has 800,000 employees). Amazon also expanded its sick-leave policy to include part-time warehouse workers and set up a relief fund, with an initial $25 million for delivery partners such as drivers affected by the outbreak.
The tech giant’s decision to go on a hiring spree and boost worker pay shows the dual challenge companies such as Amazon face as they seek to meet surging demand for food and key household items and also take care of employees at the front lines of the pandemic. Large, well-capitalized companies such as Amazon are moving to meet an extraordinary uptick in orders, writes The Wall Street Journal (March 17, 2020). “Amazon is big enough and powerful enough and decisive enough to take up a significant amount of the slack being caused by all of the shutdowns,” said the former CEO of Sears-Canada. Amazon accounts for 39% of all online orders in the U.S.
The 100,000 new Amazon jobs come at a time when broader retail is contracting and retailers rethink operating physical stores during a pandemic. Apple, Nike. and Lululemon, among others, have announced store closures. With people trying to limit their exposure, customers will rely on companies with e-commerce arms and the ability to rapidly replenish inventory more than ever. Execution so far has been spotty. Struggling with demand, many retailers have had to cancel portions of online orders or significantly delay shipping dates of some items.. The delivery-time windows of online grocers has surged to more than a week in many cities where customers were accustomed to next-day delivery.
Classroom discussion questions:
- Referring to Ch. 2 of your Heizer/Render/Munson text, how is Amazon achieving competitive advantage?
- What are Amazon’s key success factors and core competencies?