Amazon Seeking Ways to Improve Working Conditions, Says CEO Jassy

In his first shareholder letter since taking over the CEO role from Amazon founder Jeff Bezos in July, Andy Jassy highlighted Thursday the company’s response to the COVID-19 pandemic and supply chain disruption, growth in Amazon Web Services (AWS), delivery time challenges, fulfillment center worker conditions and Prime Video’s Thursday Night Football deal with the NFL.

Jassy didn’t address the recent Staten Island, New York, worker vote to form the first Amazon Labor Union (see 2204010050) but commented on fulfillment center conditions. Amazon’s fulfillment center injury rates are “sometimes misunderstood,” said the executive, saying the e-commerce giant has operations jobs in both the warehousing and courier and delivery categories.

The most recent public report showed recordable incident rates were “a little higher” than the average of warehousing peers (6.4 vs. 5.5) and “a little lower” than the average of its courier and delivery peers (7.6 vs. 9.1). “This makes us about average relative to peers, but we don’t seek to be average,” he said.

Amazon hired over 300,000 people in 2021, many who were “new to this sort of work and needed training,” Jassy said. The company has been looking at process paths to figure out how to improve working conditions for its 1 million-plus fulfillment network employees and identified what it believes are “the top 100 employee experience pain points,” with plans to solve them “systematically.”

To improve safety in the fulfillment network and reduce strains, sprains, falls and repetitive stress injuries, Amazon has programs “in flight,” including rotational programs that keep employees from spending too much time doing repetitive motions; wearables that prompt employees when they’re moving in a dangerous way; shoes that provide better toe protection; and training programs on body mechanics, wellness and safety practices, Jassy said. It will keep learning and iterating “until we have more transformational results.”

Commenting on Amazon’s role in fulfilling product deliveries when most physical stores shut down in early 2020, Jassy said hundreds of millions of people relied on Amazon for personal protective equipment, food, clothing and other items. AWS played a major role in the remote work transition, he said, saying the cloud’s elasticity to scale capacity up and down quickly and AWS’s “broad functionality” helped millions of companies adjust to difficult circumstances.

AWS and consumer businesses experienced different demand trajectories during the COVID-19 pandemic, Jassy said. AWS revenue grew 30% year over year in 2020 on a $35 billion annual revenue base in 2019 but slower than the 37% YoY growth in 2019 on uncertainty and slowing demand. Many companies accelerated their move to the cloud, helping to propel AWS’ revenue growth to 37% year on year in 2021, he said.

The consumer revenue growth seen in 2020 -- 39% year on year on top of $245 billion in 2019 -- extended into 2021 with revenue increasing 43% year on year in Q1, Jassy noted. Amazon had the equivalent of three years’ forecasted growth in about 15 months. He referenced the tight labor market, lower inventory and higher transportation costs during the period. “Then in late February, with Russia’s invasion of Ukraine, fuel costs and inflation became bigger issues,” he said.

Jassy noted the progress Amazon made in its fulfillment network, saying in the early 2000s, it took an average 18 hours to get an item through its fulfillment centers and on the right truck for shipment: “Now it takes two,” he said. In a decade and a half, with a capital investment of over $100 billion, the company has grown to 253 fulfillment centers, 110 sortation centers and 467 delivery stations in North America, plus 157 fulfillment centers, 58 for sortation and 588 delivery stations worldwide. The global delivery network has over 260,000 drivers, and the Amazon Air cargo fleet has more than 100 aircraft, he said.

Referencing resumed focus on Amazon’s one-day delivery initiative, which was interrupted by fulfillment challenges during the pandemic, Jassy said delivering a “substantial amount of shipments in one day is hard.” The capability to ship millions of items to Prime members within "a couple of days (and increasingly one day)" is an "iterative innovation” that’s “never finished and has periodic peaks in investment years,” he said.

Thursday Night Football will “reinvent the NFL viewing experience for football fans,” Jassy said. The weekly streaming-only broadcasts, airing exclusively on Amazon Prime Video, start in September and run for 11 years.