Given how much Bezos has added to his personal net worth during the pandemic ($24B [1]), perhaps its time for governments to expect better treatment for Amazon employees... or else. Charges of pandemic profiteering could be convincingly brought to bear.
AMZN operating income (revenue sans cost of rev and opex) has been growing YoY for a while, so no, Amazon is making more money and being more efficient at making it.
You're free to fact check what I said, but please don't make an argument from ignorance. A QoQ difference is hardly as impactful as multiple YoY changes.
Case in point, they just released their earnings. Revenue was way higher than normal, EPS was way lower than expected (off 30%) due to major COVID related costs. They also warned to expected even worse losses next quarter.
I win a contract to deliver mail to the moon. $5B per delivery. 1 per week. My costs are $25B + $1B per delivery (we're making this up). 6 weeks, I'm making 80% margin per delivery.
Suddenly a bunch of people want to live on the moon. Rebid, win contract that says I now have 10 deliveries per day. I don't have enough rockets to support 10 deliveries per day, so I need to build a lot.
I also need to do it extremely quickly. Instead of $5B per rocket, I need to pay $10B (expedite, overtime, shortages, etc) in order to meet my contract's deadlines. My capacity also means, I can no longer rely on existing launch sites, $100B to build my own launch site plus an additional $1B per launch.
As long as I can keep my position on this contract, I'll make mega bucks in the long run, but short term I'm hemorrhaging cash.
Slowly increased volume yes, a sudden burst of volume is a whole different story.
For example right now they are trying to hire 100,000 people to cover the increased demand. In the meantime, they are making their existing people do the work of those 100,000, or letting the work go undone. In both cases that's lost profits.
That's not how real life works though. There is lost profits in unfulfilled orders beyond just the original profit, in terms of customer service overhead and warehouse overhead.
Also, paying someone to work overtime to serve the same orders is most definitely lost profit, because it costs more to deliver the service.
Amazon's systems aren't designed for this type of sudden surge. They usually have to ramp up and prepare for it (like around Christmas).
This is hardly the first time their system has been overwhelmed, it’s designed to be robust and maximize profit. Further, a simple ships in X weeks gives them plenty of time to ramp up staff.
It comes down to the software side of their business, and they have some great back end software.
It's clear that you don't understand Amazon's business nor do you appear to be willing to listen to reason.
> This is hardly the first time their system has been overwhelmed
They have specifically said, publicly, multiple times, that they've never seen an increase like this before in the history of their business.
> it’s designed to be robust and maximize profit.
Within limits. It doesn't scale infinitely. There is a human aspect involved that doesn't scale instantly.
> Further, a simple ships in X weeks gives them plenty of time to ramp up staff.
Except, again, you are not accounting for lost profits due to increased customer service requests, increased credits to Prime members for not meeting the Prime SLA, increased costs of the warehouses being full of products they can't move because they are constantly moving the new essential products that are coming in, and a whole bunch of other fixed costs that they have not related to their variable costs.
I have talked with warehouse employees, so I have a solid idea how it operates.
> They have specifically said, publicly, multiple times, that they've never seen an increase like this before in the history of their business.
That’s true, but not that relevant.
> Increased customer service requests
Customer support is a controllable expense. When customer support lines spike past a threshold they simply lack the people to take additional calls etc.
> Warehouses being full
Amazon has cut down on new items being added while still shipping some non essential items. What your suggesting is an extremely dumb move their not going to make.
> > They have specifically said, publicly, multiple times, that they've never seen an increase like this before in the history of their business.
> That’s true, but not that relevant.
It was in direct refutation of your claim that they have dealt with this type of load before. They haven't and they have said that they have never dealt with anything like this before. That's why it's relevant.
> Customer support is a controllable expense. When customer support lines spike past a threshold they simply lack the people to take additional calls etc.
You clearly don't understand Amazon if you think this is true. Customer service is their number two core competency after logistics. It is paramount to their success.
Besides, what do you think happens when they stop answering customer service calls? Do you think people just go away? Obviously customer service is important to their business or they wouldn't have it. They can't just drop calls. So no, it's not really controllable.
> What prime SLA?
They're still giving credits if you call in and complain that your item didn't arrive within two days. Even though it tells you before you order that it won't.
> It was in direct refutation of your claim that they have dealt with this type of load before.
No, I said they have dealt with load past capacity before. Saying it’s 1% or 200% over capacity does not change the fact they have procedures in place to deal with it.
> It is paramount to their success.
Yet, you have not said how it suddenly inherently spikes in cost after their capacity is reached.
> They're still giving credits if you call in and complain that your item didn't arrive within two days.
That’s not an SLA, they will do quite a bit if you call and complain up to a point. It’s designed to maximize revenue not a contract obligation, many companies budget this under advertising costs for a reason.
Further, on the flip side they can reduce normal advertising spending which is more than enough to cover some nominal difference. But you don’t need to take my word for it, their a public company and we can just wait and see what their profit is.
The media like to focus on Bezos because he’s literally the richest man on earth. But what they’re getting at is that Amazon the corporation should pay its workers more. They’re using Bezos as a talking point, but don’t focus too intently on that. What matters is how little workers are paid for such a lucrative business.
> What's so lucrative in running a warehouse that packages shipments to people?
I had to check the definition of lucrative to make sure I wasn’t missing anything, but it seems to be both something that generates wealth and/or something that generates profit. There can be no question that amazon generates wealth. The company is now worth almost 1.2 trillion dollars [1], and the founder is now on paper the wealthiest man on earth.
The company also generates quite significant profits, after its initial long phase of investment in growth.
“Amazon annual net income for 2019 was $11.588B, a 15.04% increase from 2018.” [2]
Technically you asked what makes the business lucrative, not whether or not it is in fact lucrative. Well I am not qualified to articulate why the business is lucrative but with 11.5B in net income last year and a total value of 1.2 trillion, there is certainly no question that it is somehow quite lucrative.
Focusing on begging bezos to bless his workers with a livable wage seems like the wrong angle. It should be illegal for such a business to operate this way to begin with.
Or they can simply hire more people, which they’re doing. I’m not saying Amazon employees are greedy, but I find it ironic that people claim that the altruistic thing to do is to concentrate wealth into the hands of fewer people.
> people claim that the altruistic thing to do is to concentrate wealth into the hands of fewer people.
I am actually astounded that I just read those words in regards to minimum-wage employees. Considering the context - Jeff Bezos' worth and Amazon's margins - it is absolutely boggling. Is this a sarcastic comment?
If not, I have a genuine press. Can Amazon not do both increasing their mailroom labour and increasing pay/benefits at the same time?
I’m astounded that you literally did no research in this matter before commenting. Amazon has had a minimum wage of $15 for a couple years now. They’re paying an additional $2 for everyone now to account for the coronavirus, though it sounds temporary.
Well, it’s more like they should have been paying their workers more for a while. Now is as good a time as any to make good on a well deserved compensation increase.
Why do you think they should pay their workers more? Do you have data that they are paying below market wages? If they are paying below market wages, then how are they able to hire so many people?
Median pay for Amazon is $14 per hour, whereas median hourly wage for warehouse employees is $13, so it appears that Amazon pays a small premium over the market wage.
What makes you so special that your gut feeling of Amazon is something that people should pay attention to, rather than market wages?
I don’t believe it makes sense to expose each individual person to “raw market forces” such that without a job they would die. At least not in a society as wealthy as ours.
Much to your surprise you will find that I believe this can be done through libertarian means. This is an area of study and great interest for me.
But if you follow my theory to it’s conclusion you would find that nobody would be willing to work a shitty job for a low wage. And so, to make things work, the market would balance to higher wages. However it wouldn’t hurt anyone for Amazon to raise wages now. It seems inhuman to me what amazon workers are expected to go through. (I feel this way about other and more exploitative labor situations too.)
So the market would require higher wages if we weren’t all individualized. It’s my greatest hope to help bring us all closer together in a libertarian way such that no one wants for food or shelter.
> I don’t believe it makes sense to expose each individual person to “raw market forces” such that without a job they would die. At least not in a society as wealthy as ours.
Wow, cute.
Why do you think you can trust what you think should happen?
Do you have special training or is it a burning in your bosom?
Do you walk around saying "The price of raisins should be $3 instead of $2"? On what do you base these moral certainties?
More gut sense?
Or do you have an actual argument that a market wage is wrong and should be replaced with your own personal wage, and why do you think this is a sound argument on which to base an economy?
Don’t be a jerk. I answered your questions honestly.
> Why do you think you can trust what you think should happen?
Are you asking why I want to involve myself in philosophical debate? I’ll refer you to the existing wealth of information on the nature of philosophical debate. You’re certainly free to avoid making any presumptions about how the world should work, but judging by your comments about markets you haven’t done that either.
I want to say, explicit financial markets have their place. But we don’t use them for everything. You don’t charge your neighbor for each hello. Grandma doesn’t charge her children for Christmas dinner. Your friends don’t charge you for relationship advice even though paid equivalents do exist.
So the question is, could we ever possibly arrange the world such that we don’t always need to charge for material goods? The raw stuff of human survival? I think it’s possible if we’re willing to make some changes to society. None of what I advocate for is government based. We can do this with free markets. Markets are shaped by the conditions of our world. Can we create the conditions possible for free food to be as easy to give away as free Wifi?
As a robotics engineer I think we can. But the changes to our society would need to be pronounced. Is it worth it? Well some people might think so, and I want to explore this concept with those people.
In the Kashmir region of India there is a place called the Golden Temple. They serve 50,000 free meals a day using all volunteer labor, firewood, and huge iron pots. So I say “hey we could do this in Oakland with robots, and make the designs open source to share the engineering burden and help other cities do the same.”
So right now I’m employed designing a farming robot I hope will be open source some day.
When I meet people like you on the internet it’s all the same. I say people should have better living conditions and you folks immediately jump on me and say “how could you know that for sure” and “you don’t know what’s good for me”. Well fine. But I’m not asking anything from you. I don’t need anything from you. And I’m not going to make the government take anything from you. So chill out. There’s people in this world that just wanna help each other.
>Don’t be a jerk. I answered your questions honestly.
No, you evaded the question. All you see is morality. Your own personal morality. When a software developer says "we should not use this design pattern because it's immoral" that's a person you either remove from their position of power or you mock. Complex phenomena are not subject to childish morality, they are subject to the question of whether they work or not and how well they work.
An economy is a complex system. You want the economy to produce a large amount of goods and services. Once it does, you can always tax the economy and seize output for public spending, so that's the place where we stick your moral sentiments. You do not apply moral reasoning to individual price vectors to insist that it's "wrong" that a tomato costs this much, or that a haircut costs that much.
Morality is an evolved sentiment design to govern your behavior in small tribal groups. You can't apply it to things like an airline scheduling system or a price vector.
>Are you asking why I want to involve myself in philosophical debate?
God, no. I know exactly why you do it. The world is filled with people like you, and indeed all teens go through a casuistry phase. It's a type of self-righteous disease that is the plague of the modern era. Once people lost faith in religion, they redirect their religious fervor to going on various moral crusades like banning straws or building "moral societies" that kill hundreds of millions of people. You might grow out of it at some point when you realize the world is much more complicated than you think, and what matters is that things actually work rather than conform to some mawkish moral sentiment that was never suited to design complex systems but to govern your own personal behavior in simple tribal situations.
No, what I'm wondering is why you think price vectors are "moral" concerns and why you think you are qualified to pronounce on them philosophically.
I’m going to get millions killed by advocating for open source robotics and cooperative businesses? Give me a break. You’re seeing Stalin just because I think we should help one another. We’ve got hungry people sleeping on the streets in the wealthiest nation on earth. We’ve got jails filled with people of color whose only crime was being poor and black. If you don’t think concerned adults can reasonably discuss these subjects without “killing hundreds of millions” you’re a fool.
> You want the economy to produce a large amount of goods and services. Once it does, you can always tax the economy and seize output for public spending, so that's the place where we stick your moral sentiments.
You think the height of moral achievement is to use the government to tax incomes? Well that government also uses tax dollars to bomb weddings and school busses in the Middle East. And asking the government to help means deadlock fighting with people who don’t give a shit about your cause or the people you want to help. Excuse me for considering how we can help one another directly, without government intervention. Sheesh, I’m surprised on HN to find someone that thinks taxes are the best way to behave morally.
And what of the adults who advocate for better social programs through government spending anyway? Are you going to call them children too? You can always feel superior in your arguments if you call your opponents children.
> You’re seeing Stalin just because I think we should help one another.
No, you are not talking about "helping one another". You are talking about coercion. Amazon is offering an above market wage. Hundreds of thousands of workers want to work for this wage. And along comes Mr. Morality trying to prevent this exchange from happening because it seems "wrong" to him. Him and his 35 years of deep insight into the nature of morality. Why do you have a hard time seeing that a lot of people are sickened by this behavior?
> You think the height of moral achievement is to use the government to tax incomes?
No, I think part of growing up is understanding that economic systems don't conform to your morality, and frankly, neither does the world. Please get off of your high chair and stop talking about price vectors being moral or immoral. When you are able to see to the end of things and understand complex systems you can begin to think about weighing in on what you think is moral or immoral about them. Until then, just worry about your own behavior and let other people transact how they want. Nothing prevents you from starting a business and paying whatever wage you want, if you think you can do it better.
"The market" is determined by people's choices, not fundamental laws of physics. We absolutely can dictate how it should work and the existence of any law that restricts the market from being completely free - from forbidding child labour to setting a minimum wage to antitrust - does exactly that.
The US is approaching 20% unemployment. The stock market dropped ~32% from the peak, and is down about 15% from the former peak presently. But the richest person in the world has 50% more money than they did 6 months ago.
His net worth went up because investors bid his stock up because he was able to sell a lot of stuff that brick and mortars couldn't. There's no proof of profiteering.
I think the worker safety issues are completely orthogonal and shouldn't have anything to do with how profitable you are. In fact, you'll like find far worse conditions (and more tax evasion) in small local businesses than Amazon.
> perhaps its time for governments to expect better treatment for Amazon employees.
Not sure why it is government's business unless some law is being violated. Using government to enforce "I feel good about it" policies through violence is a sure shot way to harming everyone.
Treatment given to Amazon (or any other employee) employee has nothing to do with the profits of the company, it is all about what the competitors are able to give to those employees.
Constant vilification of factories and large manufacturing corps eventually took all those jobs to China, same might happen with tech companies as well.
[1]https://fortune.com/2020/04/14/jeff-bezos-net-worth-2020-bil...