With the Christmas holiday season approaching, several billion dollars to deal with labor shortages and supply chain issues will be spent by it, Amazon has announced.
It will do “everything it takes” to minimize the impact on customers and businesses, the e-commerce behemoth said.
On the other hand, iPhone maker Apple announced that it had taken a hit of $6 billion (£4.35 billion) in missed revenue because of the global scarcity of semiconductor chips. The company’s issues because of the chip shortage will continue through the holiday season, indicated Tim Cook, the CEO of Apple. While sales increased by 29 per cent to $83.4 billion in the fourth quarter, they fell short of forecasts. Profit increased to $20.5 billion from $12.6 billion.
In the three months to 25 September, it had experienced “larger-than-expected supply constraints”, Cook said and added that “most of our products” were now being affected by the global chip shortage.
Management of its own shortages would require the company to spend a significant amount of money, Amazon said on the other hand.
Amazon expected to “incur several billion dollars of additional costs” as it managed its way through “labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs” said the e-retailer’s Chief executive Andy Jassy.
“It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners,” he added.
Amazon’s earnings fell substantially in the third quarter to $3.2 billion, compared to $6.3 billion in the previous quarter, despite sales rising 15 per cent to $110.8 billion.
“It shows that these global giants – and they are just vastly huge businesses – are not immune from the problems that every business is facing,” said George Godber, fund manager at Polar Capital.
As economies recover from the effects of the coronavirus, businesses throughout the world have been dealing with shortages and supply chain challenges.
Since the supply of semiconductor chips has not been able to keep up with demand, therefore that has resulted in a global shortage of chips which is creating delays on the production lines of various devices, including vehicles, washing machines, and cellphones.
Increased congestion at ports in numerous nations has resulted from rising demand for products, particularly those supplied by Amazon, with retailers warning that holiday season delivery may be delayed.
Outside key ports in California in the United States, there have been record-breaking lines of container ships waiting their chance to get into the port.
Due to Amazon’s employment challenges, the company was prompted to give one-time payments of up to £3,000 in order to recruit workers in areas of the UK where there is a significant demand for labor.
During the holiday season, the company is hiring for 20,000 roles throughout its UK network, citing concerns about labor shortages.
Amazon has been accused of having bad working conditions in the UK and the United States, where it is the country’s second largest employer.
(Adapted from BBC.com)