E-commerce report shows Amazon model is unsustainable
A new report commissioned by UNI Commerce gives a global picture of e-commerce today and marks out Amazon for its unstainable business model.
The study “E-Commerce: Recent Trends and Impact on Labour” includes a survey of 15 UNI Global Union affiliates in 13 countries representing hundreds of thousands of workers in the retail sector.
The report shows the share of e-commerce in total global retail has doubled in the last five years to 15.5%, and this percentage is expected to grow annually by 8.9% until 2023.
Yet, unlike other pure e-commerce players such as Alibaba and Zalando, the world’s largest e-commerce retailer, Amazon, continues to generate operational losses on its international e-commerce business even though it has reached US$65.9 billion in sales, says the report.
Amazon’s strategy of rapid growth through aggressive discounts and its focus on top-line expansion, is increasing revenues at the expense of net profits.
“This development model has had negative effects on retailers that were affected by the aggressive expansion of Amazon, and also on workers, as Amazon has promoted a low-cost and low-standard labour management in order to keep its prices low. It is highly questionable whether the development model put in place by Amazon is sustainable in the long term if the e-commerce branch does not generate solid profitability across the board, not only in North America,” says the report.
Traditional retailers are increasingly investing in online sales but face intense competition from pure e-commerce players, which don’t pay the same taxes, don’t protect workers and have lower labour costs. A majority of UNI affiliates in the study consider that e-commerce has had a negative impact on the traditional commerce sector, on the workforce and on the quality of jobs.
UNI Global Union General Secretary, Christy Hoffman, said:
“As this report shows, Amazon’s business model of rapid expansion, low costs and low (or negative) margins means unsustainable conditions for both workers and the e-commerce industry. But it doesn’t have to be that way. Other e-commerce companies are earning margins closer to the industry and allow their workers to organize into unions. Unions must organize this growing slice of commerce and demand a new business model, which depends upon a level playing field for all.”
The study found a large majority of the responding UNI affiliates are either developing or implementing a specific plan to organize e-commerce workers. A four-year project by Swedish union, Handels, succeeded in unionizing 3,500 workers in the sector and signing 250 collective agreements.
Mathias Bolton, Head of UNI Commerce, said:
“E-commerce is a part of commerce. We can’t let e-commerce companies lower the bar in terms of job security, working conditions and wages in the sector. UNI Commerce and its affiliates are committed to organize e-commerce workers to provide better conditions for them and to keep the standards high in commerce.”
The report is available in English, Spanish, French, German and Italian below.