Please ensure Javascript is enabled for purposes of website accessibility

Amazon Is Well-Stocked on Seasonal Workers

By Adam Levy – Nov 11, 2018 at 7:16AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Amazon is reducing its seasonal hires this year by 20,000 people.

Amazon (AMZN 1.20%) isn't hiring as many seasonal warehouse workers as in years past. The online retail giant is only planning to bring on 100,000 additional employees for the holiday shopping season, compared to 120,000 in 2016 and 2017.

The reduction in seasonal hires stands in contrast to Target's (TGT -2.56%) plan to hire 20% more seasonal workers this year: 120,000 total. Citi analyst Mark May suggests that the reduction is due to improved efficiency in Amazon warehouses thanks to robots. While that's true, it might not be the only reason for bringing on fewer seasonal employees.

A man placing an Amazon box on a conveyor belt.

Image source: Amazon.

Extra-tall warehouses

As Amazon builds new warehouses, it's more likely to build up rather than out. This is a trend seen throughout the industry, with the average warehouse growing 21% taller over the last 25 years. The main reason for taller warehouses is increased help from robotic machinery, enabling warehouse owners to maximize the value of the same amount of land.

Amazon is a leader in warehouse robotics, having acquired Kiva Systems in 2012. It has gone on to install over 100,000 of Kiva's big, bright-orange robots in 26 of its fulfillment centers.

While robots can help maximize the use of floor space, the online retailer is fully embracing the idea that floor space isn't everything. "We are debating whether the dynamics of the warehouse are changing so that square footage may not be the main indicator, might be cubic feet," CFO Brian Olsavsky said on the company's third-quarter earnings call last month.

This comment indicates that Amazon could be leaning more heavily on robotics as it expands its warehouse space. Amazon notes that robots don't entirely displace human workers. Robots do make humans more efficient, though. And having more efficient workers means Amazon can get by with fewer employees.

Target, by comparison, needs humans to man registers, to stock shelves in stores, and to help customers find what they're shopping for. Trying to replace that functionality with robots might not go as well for a store that relies on a more human touch.

Other potential explanations for a hiring reduction

There are several other factors that may have contributed to Amazon's decision to reduce its seasonal hiring.

First of all, Amazon has been on a massive hiring spree all year. An Amazon spokesperson says the company has created over 130,000 jobs in the last year alone. With more permanent workers, the need for seasonal workers may have declined.

Furthermore, Amazon recently increased its minimum wage for employees to $15 per hour. That might disincentivize Amazon from hiring more workers while incentivizing existing employees to take on more hours.

Walmart has found success by offering existing workers additional hours during the holidays instead of bringing on tons of seasonal hires. The company benefits because it doesn't have to spend time and money on hiring and training, and existing workers benefit by picking up more hours.

While the reduction in seasonal workers could be an indication that robots are taking over Amazon's increasingly tall warehouses, it's more likely an economic decision based on the company's recent hiring spree and its new minimum wage. Investors certainly shouldn't see it as an indication of a sales growth slowdown more severe than what the company guided for in its third-quarter earnings release.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$115.15 (1.20%) $1.37
Target Corporation Stock Quote
Target Corporation
$148.71 (-2.56%) $-3.90

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.