Shoppers are testing Amazon’s capacity and causing it to fall behind on deliveries. On Monday, the company said it will hire 100,000 warehouse and delivery workers, including 5,900 in Texas.
Grocery retailers are stepping up hiring as more Americans turn to online shopping instead of venturing out to stores as they heed the coronavirus warnings.
That response from the world’s largest online retailer suggests that “this sudden surge in business has given Amazon a black eye because of the bar that they have set for themselves,” said retail analyst Carol Spieckerman. Amazon has been shortening delivery times for more items in recent months and expanding items available for one-hour delivery in some cities, including Dallas, earlier this month.
“Online grocery retailers who have been working with modest but encouraging growth have been blown out of the water” with the increased business, Spieckerman said.
Companies created to handle online deliveries for other retailers such as Instacart and Shipt are stretched to meet normal delivery times, too.
Amazon acknowledged issues on its website, saying the increased shopper demand was resulting in out-of-stocks on popular brands of household staples. Amazon, which pays hourly workers $15 an hour, said it will raise hourly wages by $2 an hour through April at its operations in the U.S., Europe and Canada. That’s going to cost $350 million, Amazon said.
“You will notice that some of our delivery promises are longer than usual,” Amazon said, adding that it is “working around the clock with” suppliers. Amazon is also offering the option to select “unattended delivery” during checkout for Prime Now, Amazon Fresh and Whole Foods Market delivery customers.
Albertsons, Tom Thumb, Kroger and Central Market have seen big jumps in online orders for both delivery and curbside service. Tom Thumb and Albertsons are adding 3,000 temporary employees to Dallas-Fort Worth stores.
“We are seeing increased demand, as all retailers are at this time, for pickup and home delivery. We are indeed actively hiring in these departments to meet each of our store’s needs,” said April Martin, a spokeswoman in Dallas for Kroger.
Central Market is expanding its capacity to meet online orders and is “reallocating” staff to handle the increased business, spokeswoman Mabrie Jackson said.
Stores are also shortening their hours to give employees more time to restock shelves.
Nationwide demand is stretching the system, and while stores can handle bigger crowds of shoppers, delivery systems aren’t easily expandable on short notice.
Orders placed on Monday through Instacart in Dallas were being given delivery times on Thursday.
Online services and stores depend on the same supply chain.
Even online grocery services are counting on stores, which consumers think they are cleverly circumventing by shopping online, Spieckerman said.
When customers see bare shelves in stores, reality sets in and they can make substitutions, but shoppers’ expectations online make out-of-stock items more of a letdown, she said.
Grocery retailers and Walmart have done a good job of building substitution engines that ask shoppers if they will accept an alternative item, but they all depend on a limited number of suppliers for consumer products that shoppers are hoarding such as paper towels, hand sanitizer and soup.
The supply chain for consumables isn’t as broad as the ones for apparel, home goods and electronics. Grocery retailers, however, have private brands that they can offer as substitutes to national brands.
And while Amazon has been building up its private brand portfolio, it hasn’t done that in the grocery aisles.
If there isn’t an Amazon brand of toilet paper yet, Spieckerman said. “There will be after this.”
Twitter: @MariaHalkias
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