Amazon.com as an investment
I am a happy investor in Amazon.com, a happy client, and I think Amazon is a great employer.
No, I wasn’t smart enough to buy Amazon when it was a small internet company operating from a garage, but I am smart enough to buy the S&P 500 index and and I have been able to participate in the amazing gains achieved by Amazon.com. Amazon is about 4% of the S&P 500.
During the past five years, Amazon has going up about 277%, and thus handsomely contributing to the wealth of individual investors, index investors, and hundreds of pension plans and retirement funds. Most people are investors in Amazon even without knowing it, and millions of us have been the beneficiaries of Amazon’s leadership in the stock market.
During the past 5 years, the S&P 500 has gone up about 90%. That’s about 18% per year. That’s some serious return, when you consider that for the most part, interest rates have been hovering around the 1% mark.
Apple, Microsoft, Alphabet, Amazon and Facebook now account for 17.5% of the S&P 500 and are in great part responsible for those extraordinary gains.
Amazon as as service provider
I realize that Amazon is the dominant player in many different markets and I try to use non-Amazon products and services to support the local economy, but when I need a reliable service, at a competitive price and I have very margin for error, I go with Amazon. The few times that I have been on a tight spot and I have gone with other retailers or services I have paid a heavy price.
Recently I bought a laptop from DELL computers. A delivery that was supposed to take a couple of days took two weeks. I paid dearly with a dent to my reputation in front of my clients. Had I purchased from Amazon, I am sure the product would have been at my doorsteps as promised.
Most of us know Amazon for its retail services, but Amazon has an array of other product and services, here are some of them:
- Retail goods
- Amazon Prime
- Consumer electronics
- Digital content
- Amazon Studios
- Amazon Games Studios
- Amazon Luna
- Amazon Video
- Video Direct
- Delivery
- Groceries
- Amazon Business
- Amazon Drive
- Private labels and exclusive marketing arrangements
- Amazon Web Services
- Amazon Publishing
- AmazonSmile
- Amazon Local
- Retail stores
- Amazon Home Services
- Amazon Cash/Top Up
As a consumer, Amazon is one of those brands that has gained my trust and I will continue allocating some of my consumer dollars until the day in which they breach that trust.
Amazon as an employer
While many companies were forced to cut jobs in face of the COVID-19 pandemic, Amazon went on an unprecedented hiring spree. In 2020 Amazon created 500,000 new jobs.
With almost 1.5 million employees across the globe, Amazon is only the second U.S. company to employ more than a million people (not counting McDonald’s franchise employees). And because there’s no end in sight to its growth, the company might even grab the number 1 spot in the not-too-distant future.
Starting wages and benefits at Amazon way about its competitors
Amazon is offering to pay college tuition and cover the cost of books for more than 750,000 of its U.S. front-line employees as part of a $1.2 billion investment to expand education and skills training for its U.S. workforce.
The company announced that it is providing an additional 125,000 local employment opportunities throughout the U.S., 40,000 corporate and technology, and sign-on bonuses of up to $3,000.
The good news is that roles in fulfillment and transportation offer an average starting wage of more than $18 per hour—and up to $22.50 per hour in some locations. The company also provides benefits worth an additional $3.50 per hour. They include health, vision, and dental insurance, 401(k) with 50% company match, up to 20 weeks paid parental leave.
Starting salaries for tech and corporate employees are now $350,000
Amazon is raising the floor of its annual salaries for tech and corporate employees, as the company faces stiff competition from tech employers with more impressive compensation packages.
Amazon told employees in an internal blog post, that maximum base pay would more than double from $160,000 to $350,000. Amazon has relied on stock options and bonuses to round out compensation packages, resulting in lower base salaries than other tech giants like Microsoft, Google and Meta.
Data from Levels.fyi, a compensation-sharing source for salary negotiation, shows Amazon salaries for software engineers are lower than at the other companies across comparable roles. This in turn creates a market where Amazon recruits with higher compensation packages than before.
The evolving compensation packages are not new at Amazon, and for more senior Amazon employees it can mean recent hires in lower roles actually having larger compensation packages.
Amazon roles have pay bands, a minimum to maximum range for compensation, which includes everything. Since maximum base pay was capped at $160,000, that meant higher compensation packages relied more on stock options. Amazon stock is high but down from its peak last year.
Amazon’s workforce isn’t shrinking — it doubled during the pandemic — but that was largely due to the boom of fulfillment centers within its network. Its corporate and tech workforce has been susceptible to poaching by employers with more impressive salaries.
When compared with Apple, Google, Meta and Microsoft, the only other company that has a salary as low as Amazon for a senior software engineer is Microsoft, another company that’s facing competition.
Conclusion
There are many people who criticize Amazon. Certaintly not it’s investors and consumer. And on a work place with 1.5 million workers, there will always be someone complaining about something. We have to note, however, that in the middle of the pandemic, when people where talking about The Great Resignation Amazon was able to find enough employees to meet it’s labor demands. I think that in spite of all the noise, employees are voting with their feet.