Daily Management Review

Analysts say 'Nothing's Really Changed' with Amazon's Promise of 100,000 jobs


01/13/2017




Analysts say 'Nothing's Really Changed' with Amazon's Promise of 100,000 jobs
In its latest move to win over shoppers by investing in faster delivery, creation of more than 100,000 jobs in the United States, from software development to warehouse work, was announced recently by Amazon.
 
But analysts are of the view that "nothing's really changed" at Amazon.
 
The world's largest online retailer said in a press release that in the next 18 months, it will grow its full-time U.S. workforce by more than 50 percent to over 280,000.
  
To enable the company to stock goods closer to customers and fulfill orders quickly and cheaply, Amazon is spending heavily on new warehouses. The company's promise of two-day shipping to members of its Amazon Prime shopping club, which has given it an edge over rivals, would be achieved by the new hires, from Florida to Texas and California.
 
Marc Wulfraat, president of logistics consultancy MWPVL International Inc. said that at least 16 new U.S. fulfillment centers are in the works for this year and next. He said that some mark Amazon's first expansion into population centers like Houston.
 
"We view this as a positive signal ... of the current trajectory of Amazon's businesses, as well as management's confidence," Baird Equity Research analyst Colin Sebastian said in a note.
 
"While there may be some 'political capital' involved with the timing and details of Amazon's announcement," he added, "we suspect there is little, if any, shift of employment at Amazon from international locations to the U.S."
 
Political pressure from president-elect Donald Trump to create new jobs has been felt by many U.S. businesses. Youssef Squali, managing director and global head of internet and media equity research at ‎Cantor Fitzgerald, said that Amazon's jobs addition would be par for the course for a company that has rapidly expanded since its inception.
 
"I think it's going to serve as a way to mend fences between Bezos...and Trump," Squali said. "That said, from a real employment standpoint — if you look at Amazon's historical track record — they've grown their full-time employees anywhere between 35 [percent] to 45 percent. If you spread this out over 18 months, it gets you to around 36 percent."
 
According to its annual report, by the end of 2015, the number of full-time and part-time employees at Amazon had grown to 230,800 while the company employed 117,300 full-time and part-time employees by the end of 2013, for example.
 
Noting the announcement was made " after the president-elect met with heads of several other tech companies and urged them to keep their jobs and production inside the United States", "the president-elect was pleased to have played a role in that decision by Amazon", said incoming White House press secretary Sean Spicer in a daily briefing.
 
"[Trump] may not get credit, but I'm sure he'll take it," Christian Magoon, founder and CEO of Amplify Exchange Traded Funds, told "Closing Bell" on Thursday. "This is definitely going to help Amazon and Jeff Bezos going forward with the Trump administration."
 
Amazon has made clear plans for heavy investment in retail logistics, content and cloud. That's likely to continue, Squali said. 
 
(Source:www.cnbc.com & www.reuters.com) 






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