Commentary: Amazon wage hike driven by political, economic imperatives
Amazon’s decision to raise its minimum U.S. wage to $15 an hour is both a politically savvy move and a change made out of economic necessity. It also comes at a time when Amazon’s profitability is improving, so the company is in good shape to make the change.
While some of the allegations levied against Amazon with regards to its labor practices are hyped, political pressure has been mounting for some time with regard to low wages. The narrative that Amazon is an ungenerous employer at a time when the company’s sales, profits, and valuation are soaring does not play well among many customer segments. Amazon will hope that this move demonstrates its commitment to staff and their wellbeing.
Although the hike is partly political, there is also an economic imperative to increase wages. Amazon’s superior growth necessitates a lot of recruitment which is becoming increasingly difficult in a tight labor market. This is especially so over the holiday season. Without a rise in wages, Amazon would be placing itself at a disadvantage in the labor market.
While Amazon can afford the increase, there will be an impact on the bottom line. However, this is likely to be masked by improving profitability and growing sales. It is also the case that Amazon gets something of a free pass on profit levels from investors, so is able to manage market expectations. The same cannot be said for other retailers, many of which are under increasing economic pressure to increase wages and benefits. In our view, those moves could well impact earnings into the new year.
Online sales tax collection rules take effect in 10 states
Statutes and regulations that require online retailers to collect sales tax on online orders from residents of 10 states go into effect Monday, Oct. 1, 2018.
The regulations, the details of which vary by state, apply to online retailers that do not have a physical presence in the taxing jurisdiction. The laws go into effect Oct. 1 in the following states: Alabama, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Michigan, North Dakota, Washington and Wisconsin. Similar laws will go into effect in Connecticut and Iowa in the coming months.
Thirty-two states have now passed statutes or regulations to require sales tax collection by remote sellers, according to DigitalCommerce360.com.
Online fashion retailer files IPO
Revolve, the online women’s apparel retailer known for its fashion-forward stylings women and hipster attitude, is looking to go public.
Revolve Group Inc. filed documents with the SEC to raise up to $100 million in an initial public offering. The Cerritos, Calif-based company, which was founded in 2003, had $447 million in sales for the 12 months ended June 30, 2018. It plans to list its initial public offering on the New York Stock Exchange under the symbol RVLV.
In other news, Revolve will open a 1,000-sq.-ft. long-term pop-up store and branded hotel suite inside the Palms Casino Resort in Las Vegas in the second quarter of 2019. To date, the retailer has opened only one physical store: the invitation-only Revolve Social Club on Melrose Avenue in Los Angeles.