How Amazon survived the coronavirus crisis

Covid-19 briefly brought the Everything Store to its knees — by prematurely bringing about a future Amazon has long been planning for, writes John Herman.
How Amazon survived the coronavirus crisis

Covid-19 briefly brought the Everything Store to its knees — by prematurely bringing about a future Amazon has long been planning for, writes John Herman.

In the middle of March, as the world faced down a terrifying pandemic caused by a novel and poorly understood virus, only one choice felt certain, or at least safe.

It was time for the all-purpose disaster response; it was time to stock up.

But this time-honoured routine was newly challenging. The broad, sterile, fluorescent aisles of supermarkets and big-box retailers suddenly felt more like viral gantlets.

In some cities, lines stretched out the doors, suggesting chaos and barren shelves inside. In many cities, whole categories of brick-and-mortar retail were shut down, either voluntarily or by edict. It was, at perhaps more than any moment in its history, Amazon’s time to shine.

At the online retailer, however, things were not going well. For many shoppers, it was the first place to turn, but demand for certain items was overwhelming the company’s ability to fulfill orders, not just for panic buyers but in general.

By March 17, Amazon had suspended shipments to its warehouses of items that were not in “high demand,” scrambling, and often failing, to keep up with orders for soap, sanitisers and face masks, as well as a wide range of household staples, including food.

By then, customers looking for these items were, for the first time, experiencing an Amazon that was conspicuously broken.

Here, in a time of crisis, Amazon’s vaunted e-commerce machinery was failing, and at the very tasks for which its millions of customers flocked to it. All of a sudden, the Everything Store wasn’t even as well stocked as, say, an urban corner store, or a gas station, or a smaller online retailer.

To customers trying to place orders, it didn’t just seem overwhelmed — the site seemed broken, more like a sprawling, malfunctioning machine than a retailer under unusual stress. There were signs of distress in Amazon’s vast network of fulfillment centres, too. Employees were falling ill. Some workers were staying home out of fear for their own health; others staged walkouts.

For a few weeks, Amazon — the borderline-magic website that makes things appear on your doorstep — showed us what it was really made of, revealing something more complicated and delicate than its seamless surface usually lets on: machinery half-built and already straining under its own success, supported by an army of invisible middlemen and kept running by hundreds of thousands of workers.

As of its most recent disclosure, Amazon employed 840,400 workers around the world. More than 150 million people subscribed to Prime, paying an annual fee in exchange for, among other things, access to free, fast shipping.

In recent years, Amazon has been scaling up aggressively in virtually every dimension that matters: Each year, its systems are bolstered to handle more people, more demand, more volume, more stress. Since 2014, its revenue has tripled.

It benefits Amazon to be understood as an online store because it leads to underestimation. Rather than a retail operation with a website, Amazon is better understood as a set of far more ambitious commerce-related systems overseen by a single company. This arrangement might be easiest to see in Amazon Web Services.

Through AWS, Amazon rents hosting and computing infrastructure to companies big and small. Instead of buying, operating and updating their own data centers, clients including Netflix, Apple, and the United States government rent space and computing power from Amazon.

Where possible, Amazon engages with this infrastructure as something like a customer. Netflix runs on AWS — but so does Amazon’s Netflix competitor, Prime Video.

Beneath the surface, Amazon’s retail operation works in much the same way. It is not a unified retail company through which Amazon sells products it has sourced or manufactured itself.

It’s a platform connecting millions of customers with millions of sellers — none, of course, as large as Amazon itself. In exchange for a fee, Amazon lets a wide variety of parties sell goods through Amazon, right alongside those sold by Amazon.

In exchange for more fees, Amazon will let you advertise those items against others, and its own. In accordance with another fee structure, Amazon will receive your products into its warehouses, process your orders and ship them to customers with the urgency associated with Amazon Prime, with which your listings will be badged.

For brands and manufacturers, not entirely unlike regular users, Amazon is a thing you sign up for and give money to and then live inside, and with, for better or for worse.

Amazon’s systems are designed to scale up without clear limits. Most Amazon investments are engineered for the possibility, at least, of category supremacy. Some have already achieved it.

April 2020 wasn’t far off from where things might be in 2025 or even 2030. When millions of people showed up five or 10 years too soon, Amazon’s systems weren’t ready to accommodate them.

Amazon employees hold a protest and walkout over conditions at the company's Staten Island distribution facility on March 30, 2020 in New York City. Picture: Spencer Platt/Getty Images
Amazon employees hold a protest and walkout over conditions at the company's Staten Island distribution facility on March 30, 2020 in New York City. Picture: Spencer Platt/Getty Images

The burden of this surge tested Amazon from top to bottom, pushing to the breaking point not just the Amazon most familiar to customers but also the less-visible systems that keep it running: its warehouses and the employees who operate them; the complex and suddenly confused software that generates Amazon anew, constantly, for its customers; and, crucially, its vast network of small sellers, who, just out of sight and mostly out of mind, carry Amazon on their backs.

A majority of products sold on Amazon are not sold by Amazon but rather through it, by an army of hustling merchants. Conceptually, this part of Amazon is closer to eBay or even Etsy, but Amazon tends to conceal those similarities.

Imagine a listing on Amazon — say, a pack of eight bars of antibacterial soap. From a customer’s perspective, clicking “Buy Now” does what it says it does: Amazon will charge you around €5 to ship the soap within a specified time frame.

Behind the button, however, is a competition: in this case, between several different sellers, including Amazon itself, each with its own supply chain. Amazon selects one automatically when a customer clicks the button.

According to estimates by Marketplace Pulse, an e-commerce research firm, a third of the top Amazon sellers — those doing more than $1 million in annual US sales — are based in China, bidding abroad for algorithmic supremacy and relying on Amazon to handle nearly everything after their products reach the US.

In calmer times, this globe spanning complexity is mostly invisible to the customer, who experiences a familiar, quick transaction and, in many cases, opens an Amazon branded box, shipped from an Amazon facility, maybe even delivered by an Amazon truck.

In contrast to the relatively straightforward and deliberately low-stress buying experience on Amazon, selling on Amazon is complicated, hugely competitive and populated by a wide range of actors: inventors hoping to sell a genuinely unique product alongside agnostic hustlers who base their entire businesses on what analytics software tells them is doing well on Amazon that week.

In a common seller model, the seller spends her time devising a plan to break into Amazon’s search results or find a way into a growing category; she finds a manufacturing partner in China; Amazon handles the rest.

A model for a Chinese seller inverts this, hiring Americans to sort out trademarks, translations, and sometimes marketing, while she figures out the manufacturing through local connections and lets Amazon handle everything after the product leaves port.

Amazon sellers are encouraged, both explicitly and implicitly, to operate like miniature Amazons; that is, keeping product inventory no higher than it needs to be to meet expected sales.

Amazon charges sellers who are part of Fulfillment by Amazon, or FBA, by the amount of warehouse space they use, so if they have reliable shipments coming from a manufacturer, it’s cheaper to cut things close.

Everyone who does business in China knows to take the Lunar New Year’s interruptions into account, but this year, rather than reopening after the holiday, many factories in China stayed closed.

The resulting product shortages affected virtually every major retailer, but they hit Amazon twice: It wasn’t just suppliers going off line or vendors passing along their own manufacturing delays. Sellers, who might otherwise act as an auxiliary force, simply ran out of goods.

Successful merchants are used to guessing at how the systems that govern Amazon’s marketplace work, and establishing a good reputation and gaining a foothold in Amazon’s search results can take years. Suddenly, these systems seemed confused.

In its latest financial disclosure, Amazon claimed a physical footprint for its facilities at more than 333 million square feet worldwide, with more than 192 million square feet categorized as American “fulfillment, data centres and other”.

To customers, Amazon is most visibly a website, an app and a bunch of boxes. To many of its employees, it’s a network of hidden 24-hour cities.

Derrick Palmer works in the “pick” department at JFK8, which employs about 4,000 people full time, the only Amazon fulfillment centre within New York City’s five boroughs.

In most Amazon warehouses, this job would entail walking miles a day between shelves, searching for items to be collected and handed off for packing.

At JFK8, which opened in 2018, robots bring sections of shelves, each loaded with bins, to Palmer, who removes the products and places them in a yellow plastic box, or “tote,” which is then whisked away immediately by a conveyor belt.

It’s exhausting work — the literal mileage once demanded of human pickers has been replaced with a test of dexterity and endurance.

“You’re judged by your rate,” Palmer said. “Everything is on the screen, the amount of units you did, the time at the station.”

He knows he needs to hit 325 totes an hour, about one every 11 seconds; it has been suggested to him by management that a good target is about 400, or one every nine seconds.

“Hitting your rate is a little difficult,” he said. “People well over 60 are held to the same standard as someone who is 25.” (Palmer is 31.) A lot of them can’t quite keep up, he

said, which is a good way to get written up, which is a good way to get fired.

In March, rumours of infections at JFK8 were spreading among employees, who, according to several I spoke with, were getting conflicting reports from their direct managers: two positive cases; 10; more. (Amazon says that when a Covid-19 case is confirmed in one of its buildings, it communicates this information to all employees who work in that building.)

Outside of work, it seemed as if everyone knew someone who was sick; as the month progressed, hospitals in New York were flooded, and daily deaths were rising rapidly.

To the fulfillment-centre staff, it was clear that Amazon was already responding to the pandemic on behalf of its customers — it was increasing hiring and holding classroom-style group orientation classes as usual.

Workers were showing up for their shifts in large groups and gathering during breaks and in the lunchroom. (Amazon says it implemented social-distancing guidelines on March 15, including staggering shifts and spreading out break-room tables.) Sick pay was available for workers who tested positive for coronavirus, but some still went to work pending their results.

Some started taking leave and using vacation days; others noticed managers going home too and started wondering if they should be doing the same.

As they waited, it became clear to some workers that they were Amazon’s response to the pandemic. On March 30, a week after Amazon confirmed its first case to JFK8 workers, an employee named Chris Smalls, citing worker-safety concerns like a lack of protective equipment, led a walkout; about two hours after it ended, Smalls was told he had been fired.

By Smalls’s own estimation, his walkout numbered a few dozen at most, but multiple workers at JFK8 point to it as the moment Amazon started making meaningful changes.

Workers are now supplied with gloves and paper masks. There are hand-sanitiser stations set up around the facility, although they’re not always full. The company says it is cleaning the facility between shifts and is working “closely with health authorities to respond proactively,” by, among other things, tripling the size of the janitorial team.

In February, the company drew backlash by firing Justin Rashad Long, an employee who had called attention to working conditions at the facility, helping to renew a drive by the Retail, Wholesale and Department Store Union to organise workers there.

“Normally, we’re reaching out to workers,” Stuart Appelbaum, the president of the union, said about Amazon. “Now, people are reaching out to us.”

No Amazon warehouse workers in the United States are currently unionised, and the company has been aggressive in pushing back against workers’ efforts to do so.

Jeff Bezos
Jeff Bezos

In the month and a half after Smalls was fired, eight Amazon warehouse workers were reported to have died of Covid-19. The company has not shared how many employees have been infected or died; the company’s worst outbreak, at AVP1 in Pennsylvania, is estimated by local lawmakers to exceed 100 cases.

Smalls is planning more labour actions and hoping to organise workers under a new banner — the Congress of Essential Workers.

“We want to use a union-like structure but not call it a union,” he said.

Amazon is at the height of its powers, and many of the forces that might hold it back are in decline. Much of the retail landscape is in ruins, ready to be finished off, or acquired, by one of the few remaining giants.

US President Donald Trump’s frequent broadsides against Bezos notwithstanding, Amazon is operating in a profoundly friendly regulatory and tax environment.

Millions of Americans are looking for work, and Amazon has more than a hundred fulfillment centres spread around the country, with more planned. For now. Amazon is a leader in warehouse robotics and makes no secret of its desire to automate as much of its logistics operation as possible, in the name of customer satisfaction and, of course, to satisfy its patient shareholders.

Until it can do that, however, Amazon needs workers. In 2020, they’re arriving into workplaces where their labour is both urgently needed and conspicuously treated as a problem to be eventually solved.

One employee at JFK8, who did not wish to be identified for fear of retaliation, described the material response as improving but inadequate. She has seen news reports about disinfecting and deep cleaning at her workplace but little evidence in person — she wipes down her station herself. The word she kept using was “facade”.

The media sees a facade. Rank-and-file employees see a facade. Customers, conditioned to click “Buy Now” without a thought, are interfacing with a facade. Amazon is none of the things people think it is — a website, a store, Alexa, a futuristic enterprise so novel and incomparable that it simply must be inevitable, delivery drones and all.

Beneath its layers and layers of highly scalable systems, it’s hundreds of thousands of people still at work, packing boxes.

Adapted from an article that originally appeared in The New York Times Magazine

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