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Amazon Sees No End to Breakneck Growth

By Jeremy Bowman – Updated Sep 15, 2020 at 11:55AM

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The company plans another surge in hiring just a few months after adding 125,000 workers.

Many U.S. companies are hitting the brakes on hiring these days in response to the recession. Amazon (AMZN -3.89%), on the other hand, is continuing to expand its workforce at a record pace.

After adding 125,000 permanent employees during the height of the coronavirus crisis this spring, the e-commerce giant this week said it would hire another 100,000 nonseasonal workers ahead of the holiday season, and that's on top of 33,000 corporate employees the company also hopes to hire at its Sept. 16 Career Day.

Amazon has been one of the biggest winners during the pandemic, sporting 40% revenue growth in its second-quarter report and a stock that's up 68% year-to-date, but the surge in hiring is yet another sign that the company sees no slowdown ahead, even as the economy likely normalizes once the pandemic ends.

With the hiring push, Amazon is on track to grow its headcount from 798,000 at the end of 2019 to roughly 1 million, making 2020 its biggest year for headcount growth, on a percentage basis, in several years.

In addition to the hiring push, Amazon is also opening 100 operations buildings in September, including fulfillment centers, sorting centers, delivery stations, and others, greatly expanding its capacity.

An Amazon worker in a fulfillment center

Image source: Amazon.

No COVID-19 hangover

The hiring announcement may be the clearest sign yet that Amazon doesn't anticipate any kind of slowdown in demand in the coming months, even as a coronavirus vaccine could be announced as soon as October. A number of businesses have seen sales skyrocket during the pandemic, like Zoom Video Communications and Peloton Interactive, but these companies fulfill specific needs that have surged during the crisis because their competition has been eliminated -- office work in the case of Zoom, and conventional gyms and fitness classes for Peloton. Logically, then, demand for those services should return to pre-COVID levels once the crisis ends.

E-commerce has also seen a boom, with online sales in the U.S. soaring 44% during the second quarter, and that growth rate is likely to return to historical averages around 15% as well -- but Amazon sees nothing but soaring demand in front of it, especially as the company expands its logistics operations and pushes the boundaries in areas like drone delivery.

Last year, Amazon's holiday hiring push was seasonal labor, so the push for permanent hires is noteworthy here, and a sign the company expects robust growth through the second half of the year and into 2021. After putting up 40% revenue growth in the second quarter, management called for 24%-33% revenue growth in the third quarter -- but that guidance could prove to be conservative, much as it was for the second quarter.

A Prime Day mystery

Amazon normally hosts Prime Day, its annual shopping holiday bonanza, in July during a seasonally slow time of year. This year, the festivities were delayed because of the pandemic as the company was swamped by a deluge of orders in the spring that it struggled to keep up with. Amazon said in the last earnings call that it was planning to host Prime Day in the fourth quarter instead of the third, but the company still hasn't announced a date yet, putting Prime Day 2020 in jeopardy as the window in the fourth quarter is fairly short. Since the company needs to reserve its warehouse space during the holiday season for a spike in holiday demand, it can't host Prime Day too close to Black Friday. It also needs to give third-party sellers adequate notice so they can ramp up shipments and offer deals for the discount holiday.

Rumors have circulated that Amazon was preparing for Prime Day on the week of Oct. 5. Last year, the company announced Prime Day three weeks ahead of time -- and with Oct. 5 now three weeks away, an announcement should be imminent if it's happening then.

While skipping Prime Day may be a negative for shoppers, it would only serve as further evidence that the company is seeing demand above its expectations.

Amazon is the second-biggest private employer in the U.S. behind Walmart. For a company of its size to be growing its workforce by 25% this year is no small feat. Similarly, its expected revenue growth of 31% this year to $367 billion is also remarkable. 

As brick-and-mortar competitors suffer under the weight of the pandemic, Amazon is only getting stronger. With a voracious appetite for growth fueled by surging customer demand, it's not a surprise to see Amazon growing its workforce by 100,000 people for the second time this year.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon, Peloton Interactive, and Zoom Video Communications 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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