The biggest risk facing Amazon today is that it may not deliver on long term profitability. More specifically regulations, excess hiring, and labor disputes could increase the company’s costs to the point where investors won’t see a return on their money for decades. Amazon doesn’t have to worry too much about competitors. It’s main business is very streamlined and proprietary.
It keeps its secrets very well secured. But as Amazon hires more people, there will inevitably be more complications and complaints. Many employees have already spoken out against the company’s tough culture. 10 hour shifts are the norm, compensation is lower than industry standard for most warehouse associates. This had lead workers to file class action lawsuits against Amazon. If the company wants to continue growing it needs to find a way to keep its employees content with their jobs. Costco decided to increase its starting wage for all its entry level employees some time ago. It could reach the point where Amazon may be forced to do the same eventually.
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This article has been republished with permission from Modest Money.