The “Amazon Effect:” E-Commerce Giant Replacing U.S. Workers with Robots

Amazon Effect
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The much-maligned “Amazon effect” is not only impacting sales of retailers, but also employees as the company is increasingly promoting growth through the addition of robots, while brick-and-mortar stores cut down on employees.

A new analysis by Quartz shows that while the Amazon effect is promoting growth in one of the largest companies in the world, an increasing portion of that growth is resulting in robotic rather than human hires.

Amazon.com, Inc. (NASDAQ:AMZN) has seen headcount growth of 40% year-over-year. The company also now boasts the richest man in the world as its CEO and founder, Jeff Bezos. But all that growth isn’t exactly being passed off to workers, as the company is increasingly incorporating robotics into its workforce.

This isn’t to say that Amazon isn’t bringing on any new human employees; the company was the eighth-largest private employer in the U.S. at the end of 2016. With further additions expected as the company continues its impressive growth, that rank is only expected to rise. Even now, the company is looking to construct a second headquarters that will house 50,000 Amazon employees (of the human variety, that is).

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But as the company has grown, its competition has fallen behind. Brick-and-mortar companies experienced what many have dubbed a retail apocalypse in 2017, with thousands of people losing their jobs while stores shut down across the country and bankruptcies hit former titans of the industry. Amazon still represents a relatively small portion of the overall retail industry; the area in which it is dominating is sales growth. With that growth comes an expanded workforce.

But the workforce of the future will not look like the one of today. Assuming trends so far in 2017 hold up, there will be an overall one-percent decline in employees at retailers that directly compete with Amazon. While small, that still means that 170,000 jobs will be culled, according to Quartz. This also marks the first annual decline since 2009, if the trend does indeed hold.

Amazon’s strong growth doesn’t cover all those lost jobs, either. The company will add about 146,000 employees worldwide in 2017, an increase of 43%, should the trend hold to the end of the year. Combine those two numbers, and you’re still left with 24,000 fewer employees in retail—not to mention that many Amazon jobs are not in retail, but in tech and other areas the company operates in.

Which brings us to the robotics aspect of the Amazon effect: The company is likely to add somewhere in the vicinity of 75,000 robots in 2017. That’s a huge leap from the 45,000 it added in 2016. Does that mean that the robot workforce takeover has arrived? Not necessarily, as the two figures are merely correlated. But it’s not a stretch to believe that robots will play an increasingly significant role in Amazon. If the company continues its growth while retailers retreat, that could very well lead to a robotic workforce subsuming jobs from humans.

Quartz went on to estimate that 20% of the company’s total employee base by the end of the year could be occupied by robots. With the stock flying high and growth expected to continue, it appears that the Amazon effect could also mean a more metallic workforce going forward.

 

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