'Workampers' help Amazon meet holiday rush

2:00 PM Amazon, holiday, Workampers No Comments

Jane Wells , CNBC

It's 5:30 p.m. outside a huge Amazon fulfillment center in Fernley, Nev., population 19,000. Workers pour out of the doors as a new wave of employees arrive. They're putting in close to 12-hour shifts round the clock during the final Christmas rush.

Some employees leave and go home to RVs, a few of them parked, ironically, in a Walmart parking lot across the street.

These are "workampers," temporary seasonal workers who roam the country in Winnebagos and Fleetwoods. They're filling the 31 RV parks around Fernley, east of Reno, to work for another few weeks at a center Amazon has had here since 1999.

"I've gotten to know a lot of really cool people, and I'm really going to miss them," says 50-year-old Sharon Scofield. "But then I'm excited that I get to come back again next year, hopefully, and see them again."

Scofield and her husband have set up temporary residence at the Fernley RV Park, where 60 percent of the 49 spots are occupied by members of Amazon's "camperforce". Temporary employees are paid about $12 an hour, plus overtime, and Scofield plans to use her income to pay for gas for her Winnebago all year. "The work is hard," she says. What does she do for fun after hours? "Sleep."

Amazon says it's hired 50,000 seasonal workers and may keep some of them after the holidays. Workampers say the company recruits during the off season in places like Quartzsite, Ariz., where many of them winter.

Jim Melvin is in his second season for Amazon. "It gives me extra money to travel with." This 68-year-old retiree from California says he walks up to 10 miles a day picking merchandise inside the Amazon facility. "When you walk into it, you know you're gonna work hard." He's hoping to save enough money to buy a car to tow behind his rig. Melvin blogs about his life on the road and the people he meets. "They're fun...you see the same people," he laughs.

The seasonal workers spend money in Fernley and Reno, an area recovering from the recession more slowly than the rest of the country.

Amazon even pays the rent for temporary employees at RV parks it contracts with. "It's necessary for parks like this to survive," says Bernard Roberts, general manager at the River's Edge RV Park in Sparks. "This particular park is not a destination park." He says seasonal workers provide about 40 percent of his business, and rents range from $350 to $575 a month.

Near the Amazon warehouse, Wai Louie serves up lunch at Louie's China Bistro. "Without Amazon, the whole city would be in trouble."

Soon, however, the estimated 400 seasonal workers will be pulling out of Fernley. Most temporary jobs end Dec. 23, and then they're gone...until next year.

Despite the hard work, Sharon Scofield hopes to get hired on again next year. "When I'm wrapping these presents, it makes me feel good knowing that I put that thing in there and I'm getting it out the door, and I love that challenge."

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Amazon is spending, and investors are buying

10:30 AM Amazon, buying, investors, spending No Comments

Mark Lennihan / AP

The Kindle Fire is displayed at a news conference in September, 2011.

Ordinarily, if a company announces its profit dropped by more than a third and predicts a small profit or a possible loss for the following quarter, investors don't reward it with a stock bump of more than 15 percent. Amazon is an exception.

The Internet retailing giant reported a first-quarter drop in net income of 35 percent on Thursday, the result of big-ticket investments in its Kindle line, and in shipping and fulfillment equipment. It fell to $130 million or 28 cents a share, from $201 million or 44 cents per share a year ago.

"2Q12 operating income guidance still implies a 22 percent decline on the high end as Amazon continues to invest aggressively," Raymond James analyst Aaron Kessler pointed out in a research note, although he characterized the long-term outlook at "positive."

On the positive side, Amazon reported a 34 percent jump in revenue over last year, on the high end of what it told analysts to expect last quarter, and offered a prediction of second quarter revenues ranging from $11.9 billion to $13.3 billion. Investors liked what they heard; as of Friday afternoon, Amazon's share price was up more than 16 percent, to nearly $228.

The company has been adding features and offerings to Amazon Web Services, its cloud-based services platform. This month, it also began offering its Instant Video service via Sony's PlayStation 3 gaming console. It is rolling out the Kindle Touch to more countries and investing in the Kindle Fire as sales of ebooks outstrip physical book sales.

"Given the company accounted for roughly a fifth of the print book market in years prior, the number of eBook units that the company has been selling has clearly become significant," Heather Bellini, an analyst at Goldman Sachs, wrote in a recent research note.

Earlier this week, Amazon unveiled an initiative to sell business and industrial equipment and supplies. Last month, the company announced plans to purchase Kiva Systems, a company that makes robots used in shipping and fulfillment functions.

None of this comes cheap. Kiva, for instance, will cost Amazon $775 million. But the company has a long track record of right-venture, right-time spending, said Gene Alvarez, vice president of research at Gartner Inc.

"During the dot-com collapse, when a lot of companies scaled down on e-commerce, they continued to invest," he said. When the economy recovered and more people began buying things online, Amazon was far ahead of its competitors. "Part of me is saying that mindset is still there and that's what they're doing," he said.

Even as Americans' media consumption shifts more from the physical to the digital, analysts think Amazon is well-positioned to handle the transition.

"It is important to point out that Amazon continues to gain share in the physical world, while their Kindle footprint puts them in pole position to capitalize on the transition to digital," Bellini wrote.

Alvarez said he expects competition from other tablets and e-readers, especially Apple's iPad, to intensify, which makes Amazon's investments in growing its Kindle offerings look smart. "This rivalry is going to continue to heat up. it's going to come down to the consumers choice and the customer experience," he said.

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