Brutal Conditions In Amazon's Warehouses Threaten To Ruin The Company's Image

Jeff BezosJeff Bezos

The fact that
German unions are striking over pay rates in Amazon’s warehousesin that country is easy to dismiss: Everyone knows that Amazon is the very model of modern innovation. And
Germanunions? Please. Don’t make us laugh.

But hold that thought. Because Amazon is such a big employer — it has nearly 100,000 workers — the way Amazon treats its workers is becoming a big issue, and Amazon needs to tackle it head-on before its reputation is damaged and it becomes “the Walmart of the Web.”

Consider:

Amazon warehouse workers are paid $US11 an hour in the U.S. That’s far higher than the $US7.25 federal level. But that’s not the point. From Amazon’s point of view, embittered temp workers are going to publish nightmare-ish tales of working at Amazon far faster than Amazon’s media relations people will be able to rebut them. The fact that Amazon often places its warehouses in semi-rural/suburban areas where there are few other jobs hurts the company, too. It makes people feel like the exploitation is the whole point, not an accidental side effect of trying to save money.

And then there are the margins. Amazon’s operating income in 2012 was just 1% of revenues. Walmart’s was 6%. Amazon has thinner margins than Walmart. That suggests Amazon is even more incentivized to exploit its workers than Walmart is — it has less room for error.

Amazon needs to get ahead of this. It has taken years for CEO Jeff Bezos to build Amazon into the success story that it is. It could take just a few months for its brand name to be turned into a byword for chiseling. Now is the time to act, before things get out of control.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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