Amazon Workers' Strike to Continue

Zacks

Amazon.com Inc. (AMZN), the world's largest online retailer, might continue to face strikes in 2014 by its German employees demanding higher pay and a better work environment.

Many workers are continuing their strikes at two major distribution warehouses – Bad Hersfeld and Leipzig – threatening to disrupt shipments during the peak holiday season. According to Amazon, the deliveries were on time despite 1,115 employees joining the strike at important sites.

The German employees organized many short strikes this year at Amazon’s major distribution centers viz.  Bad Hersfeld, Leipzig and Graben, to force the company to accept their demands.

The demands of the German workers include the right for collective bargaining, proper working conditions and regard for their hard work. However, Amazon claims that the current wages are above-average in the logistics industry.

Germany is Amazon’s biggest European market, with sales reaching more than €6.5 billion in 2012. Though the company assured that previous strikes had not affected deliveries, the current strike could be a serious matter of concern.

Seeing the increasing problems in Germany, in October, Amazon announced its plan to open two new fulfillment centers in the Czech Republic by the end of 2014 to cater to the increasing demand across Europe.

The growing demand for online shopping has led to the need to expand the fulfillment centers.

Fulfillment centers are giant warehouses that help Amazon and other online retailers to store products, ship them and handle returns quickly. These are important for providing the level of customer service that Amazon’s customers have come to expect from the company.

As accurate delivery of products is very important for the success of an online retail company, these strikes could delay product delivery during the peak holiday season, which in turn could translate into losses for the company.

Currently, Amazon’s shares have a Zacks Rank #3 (Hold). Better-ranked stocks that have been performing well include Autobytel Inc. (ABTL), Geeknet Inc (GKNT) and Stamps.com Inc (STMP). All these stocks sport a Zacks Rank #1 (Strong Buy).

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