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Amazon Is Hiring Even More People to Meet Surging Online Demand

By Evan Niu, CFA – Apr 14, 2020 at 9:15AM

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The e-commerce giant is spending $500 million to add temporary workers to handle booming online orders.

Last month, Amazon.com (AMZN -0.54%) said it was hiring an additional 100,000 employees, because the coronavirus pandemic has created a surge in online demand as consumers order stuff from the safety of their homes. One side effect of the crisis is that the decadeslong shift to e-commerce is now accelerating. E-commerce represented just 11% of retail sales in 2019 in the U.S., according to the U.S. Department of Commerce, so that proportion has considerable upside.

With many states still enforcing lockdowns and stay-at-home orders, Amazon needs even more workers for its core e-commerce operations.

Amazon worker in a warehouse

Amazon needs even more help to meet e-commerce demand. Image source: Amazon.

Approaching 1 million full-time and part-time employees

Amazon this week announced that it is now hiring another 75,000 positions in addition to the previously announced 100,000. The company also said it is distributing personal protective equipment (like masks) to employees, following recent employee strikes over allegations that the e-commerce behemoth was not doing enough to protect its workers. Many warehouse workers have already tested positive for COVID-19, the disease caused by the novel coronavirus outbreak.

"We continue to see increased demand as our teams support their communities, and are going to continue to hire, creating an additional 75,000 jobs to help serve customers during this unprecedented time," Amazon wrote in a blog post.

Given workers within the service industry have seen widespread layoffs and furloughs, the new jobs at Amazon could potentially help mitigate some of the broader economic impacts. Amazon is welcoming those workers "until things return to normal and their past employer is able to bring them back."

In order to attract workers, Amazon previously said it was increasing hourly wages in the U.S., Canada, and parts of the European Union, while doubling base overtime pay and providing extra paid sick leave for anyone that tests positive for the virus. Including those pay bumps, the initial 100,000 new hires were expected to cost around $350 million. Amazon now expects to spend $500 million in total to handle the demand spike. What's less clear is what kind of revenue upside Amazon is seeing in dollar terms.

Amazon regularly hires temporary workers due to fundamental seasonality with its underlying business. At the end of 2019, the company employed roughly 800,000 full-time and part-time employees. Adding 175,000 to the head count could bring Amazon's total workforce close to 1 million employees. How long the crisis lasts will dictate how long Amazon needs to keep all of its temporary workers on board.

Separately, the company has eased restrictions on accepting shipments of non-essential items into its network of warehouses, according to Business Insider. Amazon had previously imposed limits on those products in order to prioritize inventory of essential items like medical supplies and other consumer staples.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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