Amazon to spend billions of dollars to manage the supply chain and labor shortage issues for the upcoming Christmas Eve. The giant company is doing whatever it can do to fulfill the shortage and to reduce the impact on the sellers and consumers. The news came after noticing a decrease in the net income of the company in the third quarter. The net income for the third quarter was $3.2 billion. However, the company net sales increase by 15% to $110.8 billion.
The chief executive, Andy Jassy told in an interview that Amazon is expected to incur an additional cost of several billion dollars for managing labor shortage, supply chain issues, increased labor wages, and increased shipping and freight cost. This will be expensive for Amazon in the short term as it is spending additional dollars but the decision is in the best interest of the company’s customers and partners. Whenever the company is confronted with a situation to choose to maximize profit versus customer satisfaction and care, the company will choose the latter. This is seen several times during the pandemic.
Supply Chain shortages
Businesses across the globe have been facing shortages of supplies after a boost in businesses after the lockdowns. The recent global chip shortage has caused delays in many production lines including cars and smartphones. This is all because the supply is not keeping up with the demand for chips.
Similarly, the increase in demand for products sold on Amazon has increased the congestion on Airports and dry ports in many countries. The retailers have expressed their concern about the alarming situation. They feel the deliveries will get a delay in the holidays.
In California, all major ports have recorded huge queues of containers.
Similar to the shortage of supply chain, Amazon is facing a shortage of labor. In the UK, Amazon is paying extra bonuses to hire workers. The company is hiring almost 20,000 workers for its network in the UK for Christmas to cope with a labor shortage. It is paying an additional 1000 pounds bonus to recruit permanent staff. The per-hour wage of temporary workers increased from 10 pounds to 11.10 pounds. In the past Amazon has faced accusations of a poor working environment for workers. Now the company is offering extra benefits to workers to overcome its labor shortage.