Search This Blog

Showing posts with label Amazon. Show all posts
Showing posts with label Amazon. Show all posts

Tuesday, 26 December 2017

“We are people, not slaves or robots!” Companies should honour the needs and desires of their workers or pay the price for not doing so!

If one wonders whatever circumstances started the Russian Revolution in 1917 – exactly hundred years ago – or roughly 130 years earlier the French Revolution, he should look at the lower class and middle class workers and impoverished people in his country. And first and foremost to the way they are treated by the wealthy people and (large) companies in this country. 

Then this person should realize that most revolutions start because these simple workers and the non-working poor are utterly fed up with their living circumstances and want to make a drastical change, even if that might cost them their life eventually.

If the lower class workers and the poor in a country are treated humanely and are given chances to work themselves up towards a better life, no revolution will ever break out. 

However, if such workers are treated like poor, talentless and useless people, who are only good for one thing – for which they are not appreciated at all and paid very poorly too – revolution could be looming when the humiliation reaches its peak.

To this respect it is good to look at the grim developments at one of the largest and most popular companies in the world: Amazon. This company is extremely successful in both sales of food and non-food articles to the general public and rendering cloud services (i.e. the rental of broad computer services) to companies. Its status in the digital world is iconic, just as the status of its founder, Jeff Bezos.

Yet, this company seems well on its way to become one of those companies that is hated and despised by their personnel for the inhumane treatment of their workers, if the following story is indeed true.

This story, which was based upon research done by a reporter of the British newspaper Daily Mirror, was printed in the Dutch newspaper Algemeen Dagblad a few weeks ago:

Personnel of a British distribution centre of webgiant Amazon is severely underpaid for the long, long working days they have to make around the holidays. Some employees make working weeks of 55 hours for a minimum hourly wage of around UKP 8.20 (roughly € 9,16). This became clear from undercover research of British newspaper Daily Mirror.

Journalist Alan Selby worked five weeks for a distribution centre in Tilbury, where he saw that the personnel was treated as ‘live stock’ and became so tired that they fell asleep standing. Some workers had to be treated by ambulance personnel. “The personnel receives a wage that is lower than the average cost of livelihood. One of them asked: ‘Why is it not allowed to sit for a moment when it is not busy? We are people, not slaves or robots’”, according to Selby.

The journalist, who runs marathons in his leisure time, experienced that himself: “The only times that I did not stand up, was during my breaks.  My body ached, I felt dizzy and was afraid that I would topple over. One of my colleagues told me she overstretched her hamstrings, but had to continue anyway”. Selby saw the managers screaming at those who dared to rest.

Also the daily targets would lie too high. It is expected from the packaging personnel that they prepare for shipment 120 products per hour. Those who did not make that number, were fired...

When asked, Amazon did not exactly experience the urgency behind the cause for this article. Again the Algemeen Dagblad:

Amazon informed us in a reaction that they ‘offered a safe and positive working place’. “We are proud upon having created thousands and thousands of job in the past years. The targets have been based upon earlier results of our personnel”.

“Nothing to see her, folks. Everything is cool! Carry on, as you were!”

There are roughly three possibilities with respect to this story:
  • a. Alan Selby is a stargazer and a liar who makes something out of nothing. Amazon personnel should simply shut up, enjoy their work and be glad that they have a job.
  • b. Amazon is a cynical club that doesn’t give a rat’s behind about the wellbeing of their personnel and only hunts for impossible targets and yet more efficiency on the way towards full robotization of their workforce.
  • c. Amazon is not aware of treating its personnel badly and truly believes that they offer a good job to their personnel. 

The first possibility of the three is not very plausible, as at the same time of the publication of this article in the UK, the personnel of Amazon in Germany and Italy was on strike to get improvement of their labour circumstances too.

Remain the two possibilities in which Amazon is either extremely naive or cynical...

Both possibilities are not favourable for the company. And looking at Amazon’s reaction when confronted with the news in the Daily Mirror (see red and bold text), I tend to think that Amazon is just extremely cynical.

Probably the company cannot wait for the moment that they can either move most of their operations to the low wage countries, where workers are less critical and too much strapped for cash to complain about labour circumstances, or fully robotize their operations so they don’t need human workers at all. 

Anyway, the result is shocking, to these eyes!

And unfortunately the situation around Amazon is not unique. A few weeks later, an article appeared in the Dutch online magazine The Correspondent, in which the situation for the workers at Schiphol airport had been put under scrutiny. 

Also this article was written by an investigative reporter, Dick Wittenberg, who spoke with workers in the lowest qualified jobs at Schiphol.

The tendency in this article was very much akin to the situation at Amazon: long working hours without toilet breaks, poor payment and uncertain situations around the prolongation of contracts:

At Schiphol I stumble upon uncertain workers and working poor. Masses of workers are running around. Labour Union FNV estimates that at least a quarter of the 65,000 people, who work at the roughly 450 companies, does not have a steady job. At some companies or departments of companies, their share rises above 70 per cent.

They run from one temp job to another, or from one temporary contract to another. They hardly earn the minimum wage. A large share does hardly build up a pension or does not get paid at all during sickness. And in the meantime they can always be ‘written off’ and be exchanged for more productive workers.

Everything at Schiphol is aimed at keeping the tariffs for the aviation companies as low as possible. This means that insufficient demands are made towards the companies that work on Schiphol. And that goes at the expense of the personnel of these companies.

Take for instance the luggage and passenger handling companies. In the battle for the goodwill of the over hundred aviation companies that land on Schiphol, these companies feel forced to work as cheap as possible, according to a spokesman of the FNV union, Leen vander List. “This simply means more production with less personnel involved and - as a consequence of this modus operandi - also more poorly renumerated and very insecure labour contracts”. 

In order to prevend that now insecure workers can claim a fixed contract after having three sequential, temporary contracts within two years, companies at Schiphol use a trick, making use of temporary labour organizations. 

After a number of contracts at one company, the temp agency places the worker at another company for a certain amount of time. After a while, the temp worker starts again at square one at the first company. Annually, over 10,000 uncertain workers are pumped around this way. FNV spokesman Van der List calls this the ‘merry-go-round of uncertain workers’.  

Both articles are either based upon first-hand experiences of the journalist (in case of Alan Selby) or testimonies of direct witnesses at these companies in The United Kingdom and The Netherlands. However, the tendency of both articles is fiercely denied by the main corporate protagonists in it.

Hence, the credibility of both stories is based upon the credibility of the reporters in question, who state things that are 180 degrees opposite of the image that both involved companies Amazon and Schiphol want to spread to the general public: an image of happy and satisfied workers being part of one happy family at their respective companies.

I believe these aforementioned stories, however. Personally, I see a disturbing trend towards the further dehumanization of workers over the last number of years. These are workers, who increasingly have to act like robots, in their quest for their nearly impossible targets. 

People, who are denied the simplest things like toilet and smoke breaks and a few minutes to put their feet to rest, outside the bare minimum of work breaks they are granted. Because this could harm their ability to meet those aforementioned targets.

Besides that, people are suffering from (too) low wages and from lack of certainty in the form of fair contracts for a longer period of time or – even better – fixed contracts. Contracts, that build up a fair pension and fair sickness money.

The same has happened in health care and home care were nurses and other health care workers are fighting their impossible targets of having to give so much aide in only a few minutes per patient. No more room for talking with patients and giving aide beyond the bare minimum. They have to work like emotionless machines, if they want to meet their targets. Nothing else is possible.

Many healthcare and homecare workers are so sick and tired of these impossible targets and the accompanying pressure that they gave up their jobs, according to the local newspaper Eindhovens Dagblad:

This is exactly where institutes for homecare warned for for a long time: it is simply impossible to take new clients in, irrespective of the urgency of the demand. They are seriously short-handed. There is no influx of new workers. To put it even stronger: healthcare and homecare workers are leaving their job by the dozen. Only in Brabant [i.e. Dutch province in the south] already 10,000 workers left their job this year [2017 - EL].

Also in the cleaning industry this development is underway, as cleaners have to clean a class room or an office in roughly five to ten minutes. This leaves them only enough time to do a poor job, as thoroughly cleaning a class room would take at least 30 minutes. 

No good job can be done in this minimum amount of time and thus no job satisfaction can be reached, due to a job well done. Everything is arranged for meeting the nearly impossible targets, to be able for their employer to offer the cheapest price at their principals.  

The biggest problem, to these eyes, is the ongoing dehumanization of workers. 

Workers are not seen as the living, intelligent, hardworking and curious people that they are, but as durable means of production that are only appreciated for their possibilities to meet their targets. Nothing else!

When the targets are not met, the appreciation for the workers is gone at the spot and the workers must be replaced by better, quicker and more successful workers. Their opinions, worries and ideas are not important for their employers; just their sheer output.

One reinforcing effect to their misfortune is that workers, when not sufficiently unionized and represented on higher levels in society, are often extremely poor represented in the political arenas. The large, successful companies and the rich citizens on the other hand are overly represented there, because of their money and (thus) their influence on the leading politicians.

This means that the needs of the lower class workers and the poor are often neglected, in favour of measures that are aimed at the rich people and the large companies: lowering taxes and rising subsidies for investments. And preparing more building ground for expensive owner-occupied housing than cheap rental housing for the lower and middle classes. 

These groups have the money and the influence to “buy” their opinion and their interests into the political arenas.

Perhaps, the United States political arena is the most blatant example of this phenomenon, due to the nearly unlimited amounts of payments that can be made to the political parties and their representatives, as well as the extremely costly election campaigns that cause that all parties and all representatives are strapped for cash with respect to their (re-)elections. 

Paying money in The United States means buying direct influence, via the carrot (the money) and the stick (no more money for the next re-elections) clause.

Nevertheless, my gutfeeling says that the emotions of the lower class workers could come to a boiling point within a few years, when the working circumstances do not further improve and serious payment rises are made for everybody in the company, instead of the top management alone.

The only problem is, that a lot of the current, lower class anger in society is now aimed at immigrants and (religious) minority groups, instead of at the people who are behind their financial backwardedness and disdain for their position. This is expressed in the misunderstanding and sometimes sheer hatred against the religious minorities and the immigrants from Africa and Asia, that are looking for a safe refuge. This is a dangerous development, that has led to extremely bloody wars in the last century.

When this will turn around, however, and the anger of the lower classes and poor people WILL be aimed at the leading classes and the companies who treated them poorly, these leading politicians, (large) companies and rich citizens could be in for a rough ride, just like it happened more often in the past.

I personally hope it will not come this far, but the signs are not exactly promising, given the aforementioned widespread examples of antisocial, corporate behaviour.

Nevertheless, the recipe to solve this issue is fairly simple: forget the impossible targets and forget the fairytale that the robots are ready to take over most jobs. 

Start to give the workers in the simpler, but nevertheless extremely important jobs the respect and the remuneration that they deserve. Make sure that their targets are feasible and that they have enough backup to do their job in a normal way. 

Make also sure they live in decent houses in decent areas and make sure they enjoy their jobs and get satisfied by it. Don't take their efforts simply for granted, as if they are slaves or robots.

Frits Philips, one of the leading entrepreneurs behind the expansion of the now world-famous Philips brand, understood this lesson very well and he acted accordingly. He built and bought good houses for his workers and gave them sports and leisure time and the means to do so. By doing so, he earned their eternal respect and gratitude.

I wonder if Jeff Bezos of Amazon has this grandness in himself or that he is one of the infamous American entrepreneurs that treats people like slaves… or robots, as a matter of fact. 

Even robots need some maintenance every now and then; just like people do!

Tuesday, 13 June 2017

The diabolical dilemma of e-commerce: losing money on your business or losing your whole business

People who follow me more closely and visited my LinkedIn page in the recent past, know that I work for a large chain of supermarkets in The Netherlands. 
And of course this supermarket chain is involved in e-commerce (i.e. online sales of groceries). As a matter of fact, I work in the team that is responsible for maintaining and improving the omnichannel webshop, including the normal webshop, the mobile webshop and the web apps for Android and iPhone.

It is a safe conclusion to state that omnichannel e-commerce as a prominent sales channel is booming. My company presented double digit growth on its online channel sales last year and this year promises to be even better than last year.

So everything is cool, right?! Well, that depends...

E-commerce is more and more turning into an arms' race between competitors in the same line of business. It is not enough for a large online store to just have a stable and reliable webshop with a proper, state-of-the-art e-commerce CMS (i.e. Content Management System) behind it, that offers a nicely looking and smoothly operating frontend webshop.

The website should be established and maintained with usage of the latest trends and insights in neuro-marketing, SEO (i.e. Search Engine Optimization), customer-tracking and behaviourial prediction, as well as continuous performance improvement for an optimal shopping experience. On top of that it should be optimized for conversion, conversion and conversion alone, in order to make it pay itself back. Everything else is ballast and loses your store money.

Letting your customer wait for 1 minute on your website or app means angry or disappointed customers; letting them wait for 3 minutes means a new customer for one of your competitors. Customer gone = customer gone forever... or at least until the moment that all your competitors scr*w up themselves and you are back in business again!

And with respect to the shipping and delivery of the ordered goods and products to the home of the customer, it aren’t delivery days anymore, but delivery hours(!) nowadays.

Being too slow in any shape or form means that you can be out of business very soon, as your competitors never sleep and are always behind you to raise the knife against you and your online store: even if these competitors come from a totally different line of business (hence: Amazon and their innovations with respect to supermarket services).

And the biggest question regarding e-commerce is: does it earn you any money?! Where that seems a straight-forward and very simple question, the answer is quite complicated in fact!

Supermarkets and large department stores are wonders of efficiency and effectivity. 

Concepts like optimal store design and optimized shelf layout, just-in-time replenishment logistics, as well as cash registers connected to automated stock control and order services and enterprise resource planning tools (ERP) have been developed to an exceptionally high level of effectivity and efficiency in most modern supermarkets and store chains. 

The choices between A-brands versus house brands for various food and non-food products and the usage of direct mail / leaflets as effective marketing tools are thought over time and time again, making the supermarket as a ‘living organism’ extremely efficient, effective and customer-guided. Also in modern department stores, logistics and just-in-time stock replenishment is a path well-trodden and optimized to a T.

Everything in a modern supermarket and department store is set up to deliver an optimal shopping experience to the customer and welcome him back every time.

Yet, e-commerce – in any which way you do it – is a whole different ball game. 

The customer does not need to visit a supermarket or department store anymore in order to know what he wants to buy. He uses the website for that. Consequently he doesn’t come over to collect his groceries or purchased products, but leaves that for the supermarket or online store to do, as quickly and accurately as possible.

This means that either (wo)men or robots must do this collection job: men and women that need to be paid an hourly fee or robots that need to be programmed and operated at quite high operational expenses. A very efficient in-store shopper might collect 4 to 5 shopping carts per hour and a shopping robot in a “dark store” (i.e. a small warehouse or distribution centre acting as a specialized collection supermarket for robots) might collect 8 to 10 shopping carts per hour. This means that the hourly fee of the human shopper or the total operational costs per hour of the robot shopper must be divided among 5 to 10 shopping carts, meaning an additional cost of €2 - €3 per shopping cart.

And then is there the delivery of goods to the home of the customer, ideally within 2 – 3 hours after the electronic purchase. About the maximum amount that the customer will pay for this delivery to his home alone is roughly €5 - €6. Otherwise the delivery is becoming too expensive for the customer from a psychological point of view, forcing him to collect his groceries himself after working hours. 

Or...  the customer may order his groceries at the supermarket’s direct competitors when they charge lower delivery costs. There are also supermarkets and online stores that do this delivery for free occasionally or even structurally, when the customer exceeds a minimal shopping amount of f.i. €25. So being too expensive is not an option for an online store or supermarket.

Ideally a store courier for an online supermarket can deliver 8 to 10 shopping carts with groceries per hour in an average city or village, but 3 to 5 is probably no exception. This depends on the distance that needs to be driven between two customers. 

This means that for supermarkets the whole delivery process from store to home takes at least two staff members (groceries collector + courier) and one (shared) delivery van per shopping cart against hourly delivery fees of (at most) €60 per hour, but often much less.

Most online department and specialty stores can negotiate special contracts with large couriers like PostNL or DHL, but small online stores mostly pay the normally pending fees for packages and mail.

Needless to say that in most cases the charged delivery fee is hardly covering expenses for supermarkets and online stores. This means that already the delivery part of the e-commerce shopping transaction is eating away the margin of the supermarket on the purchased goods...

And to a certain degree, online supermarkets have it still relatively easy in comparison with online department or specialty stores for a simple reason: unless their customers discover a flaw in their delivered groceries – damaged goods or spoilt fruit, vegetables or meat – they wil never return their goods. This makes the issue of returned goods a relatively small risk for the online supermarket operator.

However, for online department stores or specialty shops (f.i. shoe and fashion stores), the issue of returned goods is a serious extra expense for the store management. The EU obliges the online store to pay the full shipping expenses for the customer in case of returned goods. Some customers abuse this obligation by sometimes ordering 3 pairs of shoes or 3 different dresses, only to keep the best fitting ones and subsequently return the non-fitting items to the store, at the expense of the storeowner.

This is the nightmare of every online store and it is nearly impossible to prevent themselves from such unwanted customer behaviour. The largest online stores might operate their own returned goods fleet in order to save a few bucks, but most stores toothgrindingly pay the mounting shipping expenses of PostNL or DHL. 

Consequently, such extra shipping expenses for returned goods are large margin eaters: especially for shoe and fashion stores, like Zalando, that suffer from loads of returned, non-fitting goods.

And then there is of course the issue of the e-commerce infrastructure itself: a good, efficient and well-maintained omnichannel e-commerce platform (i.e. suitable for all desktop and mobile devices) with a proven, high conversion rate costs somewhere north of € 3 – 5 million per year for a store or store chain with approximately  €100 - €200 million in online sales.

This amount includes scalable hardware or cloud services, software, web design, consultancy (Search Engine Optimization(!)) and dedicated personnel. 
This means that an additional 2% to 4% margin on the sold goods is eaten away by the e-commerce infrastructure alone. Not one year, but every year...

Nowhere the expression “stagnation is decline” is more true than in case of omnichannel e-commerce platforms:

If you neglect the response times of your web services and especially your customers’ forced waiting times – impatiently looking at sandglasses and spinning wheels on their monitor – you might be out of business without you even knowing what hit you in the first place. Customer loyalty in case of brick & mortar stores is a thousandfold of online shopping loyalty. One or two bad shopping experiences and your customers skip your online store for months, years or for eternity.

All this puts high pressure on your performance, your Search Engine Optimization (“if your SEO is not optimal, you simply won’t be found on Google”), your webshop design, your product presentation and shopping cart handling, as well as on your discount calculation and weekly promotions. 

And last, but not least, on the scalability of your online store, for the days of the year that are decisive for your annual success: Sinterklaas (i.e. Dutch children holiday), Thanksgiving (in the US), Christmas and Eastern.

Summarizing, there is so many that can go wrong with one’s e-commerce platform and the expenses of keeping it up to speed and on topic are so high, eating away a large share of one’s margin, that one could wonder why he should operate an e-commerce platform in the first place and not simply stick to the old-fashioned brick & mortar store.

To be frank, when one would look at the continuity, cost-efficiency and sheer profitability of omnichannel e-commerce alone, the crystal clear message would be: don’t do it! It costs you a whole lot of money every year and yet offers a lot of uncertainty regarding the continuity of your online shop and whole business.

But 1 + 1 isn’t always 2 in the commercial services and retail industry... 

Especially in case of (not) offering e-commerce possibilities to one’s customers, the answer to this question is not a question of black and white.

This is for the simple reason that offering an up-to-date e-commerce platform costs a lot of money per annum, but not offering an e-commerce platform could put a store chain or supermarket out of business, due to being obsolete, out of fashion and not in connection with its (future) customers anymore.

The number of people that goes to B&M stores is steadily declining and – to make things worse – real-life, offline shopping is turning into a generation thing: the older generation still mostly prefers visiting the B&M stores, while the younger generation prefers doing their total shopping online. So operating a B&M store alone and no omnichannel e-commerce platform, may get you stuck with an aging customer base and a bleak future in the end.

That is the diabolical dilemma of e-commerce today: losing money on your business or completely losing your business.

And this diabolical dilemma is not only the dilemma of small, online specialty stores (“mom & pop stores”) with a limited range of exclusive products, but also the dilemma of the largest online stores (Amazon, Zalando, Bol.com) and supermarket chains, like the one I am working for.

Especially the logistical issue (i.e. order collection and shipping) and cost-efficient e-commerce platform maintenance, in order to keep it up-to-date and customer-oriented, are almost impossible nuts to crack: for now and for the distant (?) future. There is no self-driving courier or robotized drone that will change this conundrum soon. And also no maintenance-free website that still features all your products and articles in a customer-friendly and topical way.

And that makes that the sheer profitability of e-commerce platforms and online stores will remain dubious in years to come. That is, until customers start to pay a fair price for collection and delivery of their ordered goods and stop returning so many of them.

But abolishing the online store is simply not an option, unless you only want to serve the elderly!

Blogoria.de

Blogarchief