Would Fresh Strikes at Amazon Germany Hit Holiday Sales? - Analyst Blog

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Credit: Shutterstock photo Inc. ( AMZN ), the world's largest online retailer, is again facing a strike by its German employees demanding higher pay and a better work environment.

Per reports, German labor union - Verdi - has called a strike at a major distribution warehouse - Bad Hersfeld - and would continue till Christmas if their demands are not met. Verdi stated that given the special offers during the holiday season, the order volumes has escalated, putting an increased work pressure on employees.

Amazon's German workers have been holding strikes at a number of distribution centers since 2013. The demands of these 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 €10.5 billion in 2013 and employing almost 10,000 warehouse staff at nine distribution centers. Though Amazon assured that the strikes will not affect 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 profits.

To counter the increasing problems in Germany, Amazon had earlier announced its plan to open two fulfillment centers in the Czech Republic by 2014-end to cater to the increasing demand across Europe.

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 from it. The growing demand for online shopping has made it necessary to invest in these warehouses.

Accurate delivery of products is very important for the success of an online retail company and these strikes delay delivery resulting in losses.

Currently, Amazon shares have a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Inc. ( STMP ), Geeknet, Inc. ( GKNT ) and Mercadolibre, Inc. ( MELI ). While sports a Zacks Rank #1 (Strong Buy), Geeknet and Mercadolibre have a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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