Amazon makes huge commitment to staff training
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Amazon makes huge commitment to staff training

When ecommerce titan Amazon does something, it does it big. You just have to look at the company’s annual Prime Day celebrations, or scan through one of CEO and founder Jeff Bezos’s shareholder letters to realise that Amazon is a uniquely ambitious and fascinating company. It doesn’t quietly build secondary premises – it makes cities compete to host its second headquarters. Its earnings reports might as well be marketing material, they’re so bombastic (justifiably so). So it shouldn’t come as a surprise that Amazon is trumpeting its latest decision to commit a massive amount to staff training.

Amazon’s share price has appreciated by 36% so far this year

Amazon July 15

Source: Yahoo Finance

Last Thursday, Amazon announced that it was spending an incredible more-than $700 million on staff training over the next six years. That’s an awesome amount of money, but doubtless, the company thinks it will be well-spent on an important resource: its people. Interestingly, however, it’s actually spending less per head than the average company.

In a recent article for Bloomberg, frequent Amazon observer Eric Newcomer makes the following point: “Amazon said it’ll spend about $700 million on development for 100,000 employees by 2025. That’s $1,077 a person annually. According to one estimate from the Association for Talent Development, a trade group, the average organization spends $1,296 per employee annually on training.”

The interesting thing about this analysis is it highlights a huge competitive advantage that Amazon has over competitors. Because the company is so massive, it can leverage economies of scale to deliver better training for less cost. Think about it: if you’re booking seminars, training spaces, instruction in machinery or software, or any related educational product or service, standard rules apply. Bulk orders come cheaper (per unit) than smaller orders. Add to that Amazon’s ability to use its own technical platforms to maximise the efficiency of training, and the amount it can do just by sharing all that in-house knowledge amongst employees, and you get the picture: Amazon can better equip its staff than competitors, for comparatively less money.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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