), the world's largest online retailer, is facing a strike by its
German employees for higher pay and a better work
Earlier this year, German labor union - Verdi - launched a
one-day strike at two major distribution warehouses - Bad
Hersfeld and Leipzig - and stated that it would continue till
Christmas if their demand is not met. As of now, Verdi said that
workers would strike in Amazon's logistic centers in Bad
Hersfeld, Leipzig and Graben. Additionally, a delegation of
German workers will protest at Amazon's headquarters in Seattle,
helped by the U.S. workers unions.
The demands of the German workers include the right for
collective bargaining, proper working conditions and regard for
their efforts. 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 matter of concern. Christmas is the
peak shopping period and any strike during this period could
impact Amazon's sales and profit figures.
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 of
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). Other
better-ranked stocks that have been performing well include
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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