Amazon’s expansion in Europe

The U.S. online retail giant Amazon is investing heavily in Europe, creating 11,580 jobs in 2018 alone. As Europe turns towards e-commerce, automation and digitalisation, Amazon will play a key role in reshaping the retail sector. But its impacts are unlikely to be confined to retail alone.

The European market is a major part of Amazon’s international business. Since 2010, the company has significantly expanded its presence on the continent, investing in infrastructure, real estate, services and jobs. Between 2010 and 2018, the European Restructuring Monitor (ERM) recorded a total of 60 national restructuring cases within the company in Europe, which involved the creation of 64,000 positions. All were cases of business expansion, and none resulted in job loss. In total, about 83,000 out of Amazon’s 647,500 global headcount are based in Europe across the company’s 40 fulfilment centres. In 2018, Germany was Amazon’s second-largest market, with USD 19.88 billion (€17.45 billion) in net sales revenues, followed by the UK, with USD 14.52 billion (€12.75 billion).

In 2018, the U.S. behemoth expanded its business in 8 European countries (Austria, Czechia, France, Germany, Ireland, Italy, Poland and the United Kingdom), creating 11,580 jobs. Most of the new positions are permanent and full-time, and the roles vary depending on the site’s activities. The company operates distribution or fulfilment centres, corporate offices, customer service centres, delivery stations and development centres across these countries. Thus, according to needs, it is hiring across the range from blue-collar workers and drivers to managers, IT software engineers, network engineers, data specialists, HR personnel, clerks and financial specialists.

Amazon full-time employee headcount, selected Member States, 2018

Country

Full-time employees

United Kingdom

25,000

Germany

16,000

Poland

14,000

France

5,500

Italy

5,500

Czechia

4,500

Ireland

2,500

Luxembourg

2,000

Slovakia

1,800

Spain

1,600

Romania

1,000

Source: Amazon [1]

These expansions come at a time when European e-commerce is showing strong growth. According to the report E-commerce in Europe 2018, [2] nearly 268 million European consumers made online purchases, worth €198 billion, in the 12 months between 2017 and 2018. This represents an increase of 9.4%, or €17 billion, compared to 2017. Amazon aims to take advantage of this rising consumer spending through its ability to offer a wide variety of items that can be shipped quickly. According to a recent study, almost 90% of UK shoppers use Amazon, and an increasing share have access to its Prime subscription service, which facilitates quick delivery.

Working conditions questioned

Concerns have been raised regarding the company’s working conditions. In November 2018, strikes were held across Europe by Amazon employees demanding better working conditions and wages and protesting at the company’s refusal to negotiate with them. In the past, Amazon has been criticised for suppressing trade union activity. Nonetheless, Amazon workers have found more success in Europe; Eurofound’s EurWORK observatory recorded the establishment of trade unions at Amazon’s centres in Czechia in the first quarter of 2018 and Slovakia in the third quarter. In Spain, Amazon workers received union support as they organised their first strike at the country’s biggest logistic centre in March 2018.

Threatening the high street

Few companies have as tangible an impact on as many industries as Amazon. After reshaping the retail landscape, the so-called Everything Store has set its eyes on pharmacy, media and entertainment, cloud computing services (with Amazon Web Services), logistics and even financial services, among other sectors, over the last few years. The company recently announced that it is developing a fashion application to allow its customers to try on outfits in the virtual realm. While the new app aims to eliminate the need for a trip to the high street, there are fears that it may bring further woe for high-street retailers. In the UK alone, an estimated 1,267 stores were shut down in 2018. Some large examples of such restructuring cases include Debenhams (4,000 job losses), Homebase (1,800 job losses), Poundworld (5,100 job losses) and House of Fraser (2,000 job losses). The high-street chains blame rising costs as well as falling footfall as shoppers move online.

During the last quarter of 2018, anti-trust investigators and competition lawyers turned their attention to Amazon, focusing on data usage and the way that the retailer has a hybrid role as both a shop and a platform for other sellers, mainly small businesses. The central issue under investigation, according to the European Commissioner for Competition, is whether Amazon abuses its dominance of online retail to collate useful data from competitors and then uses the same data to push sales of its own wares. The Austrian, French and German competition authorities have opened investigations focusing on unfair terms in the contracts between Amazon and retailers, while organisations representing small and medium-sized businesses have called for greater transparency in the way large online platforms like Amazon operate.

Driving automation

Despite rapid rises in its employment headcount, Amazon has invested significantly to automate its warehouses, improve its delivery system and offer better service to clients. In January 2019, it signed a commercial deal with the French warehouse robotics firm Balyo to supply it with self-driving forklift trucks. Since the acquisition of Kiva Systems in 2012, Amazon has entered into corporate and academic partnerships to support innovation throughout its robotic systems. As of February 2019, it has more than 100,000 robots inside its fulfilment centres across the world. These help cut costs and speed up deliveries. According to Amazon, robots will not replace human labour entirely – at least not yet – and, for the time being, workers have found new roles inside the warehouses, such as robot operators, or have been moved to other positions. There is no doubt that Amazon’s efforts have made other retailers think along similar lines to stay abreast in the race. The global logistics automation market is projected to grow from €40.31 billion in 2017 to €89.66 billion in 2024. The growth of the market can be attributed to the rampant growth of e-commerce, advancements in robotics and the emergence of the Internet of Things.

Digital transformation is affecting all aspects of life in Europe. The retail sector is experiencing particularly severe turbulence due to the accelerating shift away from in-store shopping towards e-commerce. Amazon seems to be at the centre of the new ecosystem that is being created. The company has expanded rapidly in Europe during the last decade and has signalled its commitment to continuing to do so. At the same time, it will keep evolving and constantly reshaping its business model, affecting more and more sectors.

Image © wawritto


References

  1. ^ Amazon (n.d.), Investing in Europe , web page, accessed 16 May 2019.
  2. ^ PostNord (2018), E-commerce in Europe 2018 , Stockholm.

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