Amazon to pay billions to prevent Christmas shortages

Amazon said supply chain and labour solution would be ‘expensive’ in the short term, but was the ‘right prioritisation for our customers’

Holly Bancroft
Friday 29 October 2021 15:22
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<p>Amazon’s net income dropped to £2.3bn in the third quarter of 2021, compared to £6.3bn in 2020 </p>

Amazon’s net income dropped to £2.3bn in the third quarter of 2021, compared to £6.3bn in 2020

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Amazon will spend billions of dollars to try and manage labour shortages and supply chain issues in the run up to Christmas, it has been reported.

The company’s chief executive, Andy Jassy, said that the retail giant expected to “incur several billion dollars of additional costs” due to “labour supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs”.

Mr Jassy added that the injection of funds would be “expensive for us in the short term, but it’s the right prioritisation for our customers and partners”.

He continued: “We’ve always said that when confronted with the choice between optimising for short-term profits versus what’s best for customers over the long term we will choose the latter – and you can see that during every phase of this pandemic.”

The comments come as Amazon revealed that its net income had dropped to £2.3bn in the third quarter of 2021. This is compared to £6.3bn in 2020.

Mr Jassy, who took over from Amazon’s founder Jeff Bezos in July, said that the company’s drop in income was due to people returning to shops and relying less on Amazon for packages as the world recovered from the pandemic.

Amazon has also been so affected by staff shortages that it has started offering one-off payments of up to £3,000 to attract workers in the UK.

It also offered a £1,000 signing-on bonus to recruit permanent staff in August.

Reuters reported that the company’s chief financial officer, Brian Olsavksy, had said that worker shortages had started to impact on other areas of the business.

Amazon’s lacklustre results come as retailers warn shoppers to get their Christmas orders in early due to supply chain issues.

Apple has also warned of supply chain problems, and announced lower than expected revenue in the fourth quarter of 2021.

CEO Tim Cook blamed the problems on supply chain issues, including an industry-wide chip shortage and “Covid-related manufacturing disruptions in southeast Asia”.

But he added: “We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $6bn.”

The company posted quarterly sales of $83.4bn, slightly lower than analysts had anticipated. Sales of iPhones were also lower than forecast at $38.9bn.

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