The holiday shopping season is the most important time of year for many retailers. In fact, for some companies, retail sales leading up to Hanukkah and Christmas can account for as much as 40% of their annual revenue, according to the National Retail Federation. Unfortunately, Amazon.com (NASDAQ: AMZN ) is facing some serious headwinds this year that could derail sales in certain markets.
When disaster strikes
Customers around the world have come to depend on Amazon for affordable prices and speedy delivery. But that model is under fire today as hundreds of Amazon employees went on strike in two of the e-commerce giant's logistics centers in Germany. The protests, which began in May, have spread to the U.S., where a delegation of union workers will rally at Amazon's headquarters in Seattle this week.
The timing is particularly worrisome, as the holiday shopping season is the busiest time of year for Amazon. On top of this, Germany represents Amazon's second-largest market outside the United States, with 21% sales growth in the region last year. In 2012, the German market accounted for a third of Amazon's annual revenue overseas.
The protestors are demanding better wages from Amazon. But a company representative told Bloomberg that workers at all nine of its German fulfillment centers earn an income "at the upper end of what is the norm in the logistics industry."
Even with hundreds of German employees not showing up for work recently, Amazon said the incidents wouldn't impede holiday deliveries. A company spokeswoman told Reuters, "Our customers can continue to rely on us for the prompt delivery of their Christmas presents." It certainly helps that Amazon has staffed an additional 14,000 seasonal workers this year throughout its nine distribution facilities in Germany. But if the strikes continue, it could dent Amazon's reputation in the country.
Of course, Amazon isn't the only retailer to endure union strikes this season. Big-box employees took to the streets to protest wages at Wal-Mart ahead of Black Friday last month. In fact, demonstrations were planned at as many as 1,500 Wal-Mart stores around the country on Black Friday, as labor groups went on strike to fight for higher wages.
Even if Amazon isn't willing to admit it, retail strikes can seriously harm a company's public image. Consumers want to know that the companies they're shopping at uphold some level of corporate responsibility. Moreover, while Amazon's strong European logistics network and seasonal workforce in the region should help it deliver holiday packages on time, the e-tailer will need to face the unions sooner or later.
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