AMZN Likely to Face Strike in Christmas

Zacks Inc. (AMZN), the world's largest online retailer is likely to face a strike by its German employees this crucial shopping season unless the company raises wages.

As per reports, German labor union – Verdi – has already launched a one-day strike at two major distribution warehouses – Bad Hersfeld and Leipzig – and could continue till Christmas if their demand is not fulfilled. 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 Amazon assured that previous strikes had not affected the deliveries, the current strike could be a matter of worry for Amazon. Christmas is the peak shopping period and any strike during that period could impact Amazon’s sales and profit figures.

This news comes at the heels of the company’s announcement that it is expanding its operations in the U.K. The company will add 15,000 staffs, including part-time and seasonal workers, across its fulfillment centers in the U.K. to meet the increasing demand during Christmas.

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 of the company.

The growing demand for online shopping has led to the need to expand the fulfillment centers. As accurate delivery of products is very important for the success of an online retail company, these strikes delay product delivery which in turn will translate into losses for the company.

Currently, Amazon's shares have a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Autobytel Inc. (ABTL), Advanced Micro Devices, Inc. (AMD) and Align Technology Inc. (ALGN). All these stocks carry a Zacks Rank #1 (Strong Buy).

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