Amazon Faces Strike in Germany Again - Analyst Blog

Amazon.com Inc. AMZN, the world's largest online retailer, is likely to face a strike by its German workers unless it raises their wages.

Per reports, German labor union – Verdi – has called a two-day strike at two major distribution warehouses – Bad Hersfeld and Leipzig – demanding proper working conditions and a pay hike. However, Amazon claims that the current wages are above average in the logistics industry.

Germany is Amazon's biggest European market, with sales reaching more than €10.5 billion in 2013. Though Amazon assured that previous strikes had not affected deliveries, the current strike could be a cause of concern.

In view of the increasing problems in Germany, Amazon had earlier announced its plan to open two fulfillment centers in the Czech Republic by the end of 2014 to cater to the increasing demand across Europe.

Fulfillment centers are giant warehouses that help Amazon and other online retailers to store products, ship them and handle returns quickly. These are important for providing the level of customer service that Amazon's customers have come to expect of the company. The growing demand for online shopping has made it necessary to invest in these warehouses.

Accurate delivery of products is very important for the success of an online retail company and these strikes delay product delivery, which translate into losses for the company.

Currently, Amazon shares have a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Gaiam Inc. GAIA, Applied Micro Circuits AMCC and PLX Technology Inc. PLXT. All these stocks sport a Zacks Rank #1 (Strong Buy).