Amazon expects to pay “billions” to prevent shortages at Christmas

Amazon has said it expects to pay out billions in additional costs to prevent labour shortages at Christmas.

The company made the announcement as it posted its third quarterly earnings report, in which it saw its sales continue to grow, however its profitability hampered by labour and logistics challenges.

“In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply-chain issues, and increased freight and shipping costs,” Amazon chief executive Andy Jassy.

The company’s Q3 sales increased to $110.8 billion compared with $96.1 billion year-on-year, meanwhile its net income shrank by nearly half due to increased costs as a result of the pandemic.

“We’ve nearly doubled the size of our fulfillment network since the pandemic began,” Jassy added.

READ MORE: Over a million UK households received Amazon parcels they never ordered

The figures were within line with some of the company’s July projections, however the company did forecast slower sales growth in Q4.

The ecommerce giant’s shares fell by 5 per cent in after-hours trading.

Amazon’s cloud service, AWS, continued its strong growth with a 39 per cent leap year-on-year, however its bricks-and-mortar division appeared to stall after issues in Q2.

Leaked documents reveal Amazon is falling behind on its ambitious plans to open hundreds of Fresh stores.

The company is also hiring at an impressive pace in a bid to avoid shortages during the festive period, bringing its global workforce just shy of 1.5 million.

It is also hiring an extra 150,000 temporary workers over the busy holiday season.

“It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners,” Jassy said.

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