Amazon on Pace To Boast Fortune 500’s Second-Largest Workforce

By Ángel González
The Seattle Times.

WWR Article Summary (tl;dr) The jobs added by Amazon last year were equal to more than a quarter of those added by the entire U.S. retail sector in the same period. That doesn’t even account for the huge number of creators and inventors using amazon to pursue their passions and grow their small businesses. Thousands of women in business are reaching millions of new customers via Amazon’s cloud.


If big boy Amazon keeps growing like a startup, it may soon employ more people than any other Fortune 500 company except Wal-Mart.

The tech and retail giant had nearly 230,800 employees at the end of 2015, not counting the 100,000 seasonal workers it hired for the holidays.

That’s a nearly 50 percent jump from the previous year. The 76,700 bump was about the size of oil giant Exxon Mobil. Or not far from the whole of Amazon in 2012, when the company had 88,400 employees.

The bulk of these new Amazonians aren’t highly paid techies in the company’s South Lake Union headquarters. Instead, Amazon says most of the growth comes from what it calls “operations,” the sprawling infrastructure that moves a growing share of the world’s merchandise in ever shorter delivery times.

Amazon’s swelling job numbers are the latest indicator of how the Internet retailer, which last year surpassed for the first time the $100 billion revenue mark, and also left Wal-Mart’s market value in its wake, has become a pivotal economic force not only in sales, but as an employer, too. The explosive growth, moreover, comes at a time when other retailers’ head counts stagnate.

“It’s an extraordinary number,” and surprising, given Amazon’s focus on robotics in its operations, says Kelli Hollinger, director of the Texas A&M University’s Center for Retailing Studies.

The jobs added by Amazon last year were equal to more than a quarter of those added by the entire U.S. retail sector in the same period, from auto dealers to department stores.

Of course, that increase is spread across a global workforce, which is growing fast in India and Europe. And the company has been criticized for destroying more jobs than it creates as it drives less-efficient brick-and-mortar competitors into the ground.

But Amazon employs at least 135,000 full-time employees in the U.S., from warehouses in Kentucky to developers in California, and about 26,500 in its home base of Washington, most of them in Seattle.

Also, Amazon’s own job numbers don’t account for those generated by the hordes of third-party sellers using the Amazon platform, or the entrepreneurial authors that rely on it to make a living.

Those are hard to measure, although Amazon has tried to account for its economic impact in the U.S. On its website it has tallied more than 2.5 million authors and merchants peddling their wares or services through Amazon, as well as developers using its cloud computing services to grow their businesses. About 85,000 are in Washington state.

“We’ve created tens of thousands of new jobs to meet customer demand, and we’re happy to be investing in many communities across the country,” says Amazon spokeswoman Teal Pennebaker. “We’re also excited to see so many creators and inventors using Amazon to pursue their passions and grow their businesses — authors self-publishing on Amazon, small businesses reaching millions of new customers, and startups growing quickly” using Amazon’s cloud.

Still, experts estimate the two-decade-old behemoth’s growth spurt is, as Amazon founder and CEO Jeff Bezos might say, still on Day 1.

Amazon accounts for less than 4 percent of all U.S. retail sales. But its piece of the pie is growing fast: The company captured nearly a quarter out of every dollar of U.S. retail sales growth in 2015, according to analysts with Macquarie Research.

It’s doing that in part by pushing to deliver as fast as it can, opening local distribution centers close to major markets. It just finished one such center in Kent, for which it’s hiring 1,200 workers.

Amazon Web Services, which rents out computing capacity and cloud storage, is still in its infancy, according to analysts, and could potentially need lots of new data centers. If Amazon, as some experts believe, is building a big transportation business to supplement the service it gets from UPS and FedEx, well, that’s even more people.

“I’d still characterize it as the early days,” said Colin Sebastian, an analyst with Baird.

Breakneck growth
Last year, Amazon ranked 41 in Fortune’s list of largest U.S. companies in terms of employees (the ranking is based on the 154,100 workers Amazon had at the end of 2014).

But if its head count keeps growing at the 38 percent rate it has averaged since 2012, by 2017 it might be second only to Wal-Mart, which has 2.2 million employees.

Workforce growth even exceeds revenue, which has averaged annual growth of about 20 percent in the same period.

Some analysts say the ramp-up is part of an investment to expand the company’s ability to handle future revenue.

“They build up the capacity before they grow into it,” Sebastian said, adding that such expansions are cyclical. He warns that the growth in jobs may moderate as Amazon integrates advances in technology.

Yet many analysts are surprised by how many jobs Amazon has added recently, given that it has a history of embracing automation, which also has recently ramped up.

At the end of 2015 it had about 30,000 robots manufactured by Kiva Systems, a company it bought in 2012. That’s double the number in 2014.

Also, Amazon has been clashing with unions in Germany, something that should be pushing Amazon to bank even more on robots, says Scot Wingo, chairman of ChannelAdvisor, an e-commerce consulting company. “It seems ripe for changing from human jobs to robot jobs. But when you look at the numbers, it seems they’re still tied to hiring,” he said.

More productive workers
In any case, the way Amazon deploys its workers makes them more productive than the typical retail worker at, say, Wal-Mart, where “more is focused on service, which may mean lower revenue per employee,” says Sucharita Mulpuru, an analyst with advisory firm Forrester.

Amazon’s staffers generated more than a fifth of Wal-Mart’s revenue with a tenth of its archrival’s head count.

That same productivity gain is at the root of what consultancy Civic Economics and the American Booksellers Association say is a negative impact on local economies. In a joint study released last month, dubbed “Amazon and Empty Storefronts,” they say Amazon created far fewer jobs than it destroyed, resulting in a net loss of 135,973 retail jobs across the U.S.

On the other hand, about half of the items sold on Amazon come from third-party merchants. It’s hard to know how many of the jobs created by these firms depend on Amazon, but ChannelAdvisor’s Wingo says that in 2015 these companies sold about $132 billion through the site, more than Amazon itself.

Infrastructure for others
Some are entrepreneurs who probably wouldn’t exist if it weren’t for the pipeline laid out by Amazon. Joe Jaconi, the co-founder Tech Armor, a small company that sells screen protectors and other accessories for mobile devices, says he and his partner, Eric Tong, started out in 2012 with the idea that they could sell their goods through the Amazon site.

Since then the Los Angeles-area company has sold 9 million units through the e-commerce giant, and it now has 21 employees, 11 in the U.S. The company also sells products through other sites, but Amazon remains its largest channel.

Jaconi said in an interview that the infrastructure set up by Amazon, which handles storage and shipping of Tech Armor products sold through Amazon’s site, has been a critical enabler of his business.

“Honestly, to ship that volume of shipments ourselves would require a tremendous investment from us,” he said.
Servicing third parties is an increasingly profitable part of Amazon’s business, but it’s also a key aspect of how the company sees itself: a disrupter that eliminates traditional gatekeepers.

In a letter sent to shareholders in 2012, CEO Bezos said Amazon allows “thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical. These innovative, large-scale platforms are not zero-sum — they create win-win situations and create significant value for developers, entrepreneurs, customers, authors and readers.”

ChannelAdvisor’s Wingo says the unrelenting march of time, not Amazon, is to be blamed for the loss of traditional retail jobs. Even brick-and-mortar retailers are pursuing ways to get rid of store associates through technological innovation, he said.

Steve Tadelis, an economics professor specializing in e-commerce at University of California Berkeley’s Haas School of Business, says Amazon’s prodigious expansion is cost-conscious and data-driven. By investing in machines in areas where the human touch adds friction and keeping the human touch where gut decision-making is needed, “in theory they could grow quite dramatically.”

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