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Will Swapping People for Robots Help Amazon Dodge Safety Fines?

Amazon once again was cited for safety violations at three warehouses, though one thought leader believes the e-comm giant’s robot investments could soon displace many of the company’s human workers––a scenario that could rewrite its workplace image.

And in the wake of Amazon’s recent antitrust settlement with the European Commission, Poland’s competition watchdog is pressing charges of its own. The regulator is alleging that the e-commerce giant misleads consumers on three counts: when a sale is completed, product availability and delivery deadlines, and reimbursement as part of its “Delivery Guarantee.”

After investigating the tech titan’s business since September 2021, The Office of Competition and Consumer Protection (UOKiK) found that when a consumer places an order on Amazon and receives confirmation of the order, the confirmation is not equivalent to the conclusion of a sales agreement.

In layman’s terms, Amazon can still decide to execute on or cancel a transaction even after the order is completed. Instead, Amazon considers the moment the product ships out to be the binding contract that completes a sale.

The office says that while this provision is included in the company’s terms and conditions, as well as at the last stage of the purchase process, its legibility and placement makes it difficult for consumers to read these details. The terms are listed at the bottom of the page, displayed using a gray font against a white background.

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Conversely, the watchdog indicated that consumers’ attention instead shifts to buttons like “Buy now” on the product page or “Proceed to checkout” upon adding a product to the cart.

“The President of the Office is of the opinion that such wording may suggest that a product is purchased when ordered and the transactions is finalized as soon as the goods have been paid for,” the statement said.

Like the larger E.U. antitrust probes before it, Amazon would stand to lose up to 10 percent of its total sales if the watchdog proves it accusations and levies a fine.

The watchdog also determined that product availability and delivery deadlines may be falsely presented to consumers. First, products labeled as “available,” or goods that illustrate a specific number left in stock, could still be either unavailable at a warehouse or the shipment may be impossible to execute.

Similarly, UOKiK argues that the deadlines shown in delivery messages, whether it be on or before a specific date of delivery, are only approximations. Only consumers who read’s terms and conditions would understand the delivery times are not exact, the office said.

“Consumers take their shopping decisions under the influence of various factors. On top of the price, it is important that the product is delivered until the expected deadline, and if you are suggested by the Amazon offer, you may be convinced that the store will guarantee this to them,” said Tomasz Chróstny, president of the Office of Competition and Consumer Protection, in a statement. “They have the right to rely on the declarations given on the website and assume that the available functions are not misleading.”

Chróstny said that if consumers knew that placing an order was not considered “an act of purchase” and that product availability and delivery time were only presented as estimates, they might not buy from Amazon.

The third issue stems from Amazon’s “Delivery Guarantee,” which says the online marketplace will refund any shipping fees associated with an order if a delivery attempt isn’t made by a specific date.

But shoppers must first apply to get a refund for the shipping fees—a fact that the office says is only established at the checkout summary stage, or if the consumer clicks through subsequent links related to the delivery details.

If consumers are not informed of their rights, they may not know they can apply for a refund, preventing them from getting what they might be owed, the office says. Complicating matters, Amazon doesn’t include this information in the order confirmation.

“The necessary information concerning your rights should be communicated clearly and unambiguously and within the appropriate timeframe, that is, as early as at the stage of product details, so as to make it possible to compare the product with other purchase options,” UOKiK’s statement said.

A spokesperson for Amazon told Sourcing Journal, “We follow all legal requirements in the countries where we operate. We will continue to look for ways to further improve our customer experience, and we will cooperate with UOKiK.”

The Seattle-based company has been under a global spotlight for several years in relation to its business practices, with legislators across Europe taking aim at the company’s use of third-party data and its simultaneous roles as a marketplace host and a competitor to the third-party sellers it services. When the tech titan settled the European Commission’s two-year probe in December, it agreed to add a second “buy box” on its marketplace and allow Prime sellers to choose any carrier for their logistics and delivery services.

Prior to the settlement, Amazon agreed to simplify the process required for cancelling its Prime membership subscription service in Europe, following a series of complaints from regional consumer protection groups.

Amazon still faces competition enforcement in Italy—where it was fined $1.3 billion at the end of 2021 over charges that it had abused its market position by pushing third-party sellers to use its Fulfillment by Amazon (FBA) service.

Could robotics replace humans at Amazon?

While Amazon’s drama continues to unfold in Europe, the company’s continuing innovation in automation may be shifting how the company approaches labor, particularly after laying off approximately 18,000 employees across its business.

One of the biggest prognosticators in the investing realm believes Amazon has a lengthy robotics runway, so much so that the automation deployments could soon outpace the number of humans the Everything Store chooses to hire.

Cathie Wood, the founder and CEO of asset management firm Ark Invest, told CNBC’s Squawk Box, “We believe that by the year 2030, Amazon can have more robots than employees.”

“Amazon is adding about a thousand robots a day,” Wood said. “If you compare the number of robots Amazon has to the number of employees, it’s about a third.”

Amazon had more than 1.6 million full- and part-time workers at the end of 2021, according to its most recent annual report. But even prior to the layoffs, Amazon implemented a corporate hiring freeze, and a report from last summer indicated that the company was having trouble hiring employees within its facilities, particularly in Phoenix and California’s Inland Empire region. Amazon said at the time that the assumptions were designed to examine several possible scenarios, but not to make ultimate hiring decisions.

Whether a pool of labor still exists for Amazon or not, its U.S. attrition rates illustrate why the robotics projection may hold merit. Amazon saw attrition rates of 123 percent in 2019, which jumped to 159 percent in 2020 during the pandemic, a Recode report said, citing leaked internal research from mid-2021. Turnover rates across the U.S. transportation and warehouse sectors as a whole were much lower: 46 percent and 59 percent respectively in 2019 and 2020, according to Bureau of Labor Statistics estimates.

Within a month of the Recode report, Amazon introduced its first fully autonomous mobile robot, Proteus, and robotic workcell Cardinal, as part of its fleet of new machines designed to expedite warehouse fulfillment.

Amazon built Proteus to navigate around workers—meaning it doesn’t need to be restricted just to certain areas in a warehouse. It complements the movement of Amazon’s “GoCarts,” the non-automated, wheeled transports used to move packages around its fulfillment centers. The company said it wants to automate GoCart handling, which can help reduce the need for workers to manually move heavy objects, a point of contention for the Occupational Safety and Health Administration (OSHA), the federal workplace safety watchdog.

On the other hand, Cardinal uses artificial intelligence (AI) and computer vision to pick packages out of a pile. The robotic arm can lift a package and read its label before placing it in a GoCart.

In November, Amazon revealed yet another robotic system for its warehouses called Sparrow. The system is specifically designed for advanced item handling, with the technology able to detect, select and handle individual products within Amazon’s inventory.

Beyond Amazon, Wood predicted robotics would spread across manufacturing, as improving technology and falling costs speed up the transition from human employees.

“If you look at the cost declines, which drive all of our models…for every cumulative doubling in the number of robots produced, the cost declines are in the 50 to 60 percent range,” Wood told CNBC.

The investor’s comments came just days ahead of OSHA citing Amazon for new safety violations at three warehouses in Colorado, Idaho and New York.

“Amazon’s operating methods are creating hazardous work conditions and processes, leading to serious worker injuries,” Assistant Secretary for Occupational Safety and Health Doug Parker said in a statement released Wednesday. “They need to take these injuries seriously and implement a company-wide strategy to protect their employees from these well-known and preventable hazards.”

The agency handed down penalties of $46,875 for problems it found across the three facilities, including employees frequently having to lift and handle heavy boxes and objects and work long hours just to check everything off their to-do list. OSHA also called out the Amazon warehouses when it found “[e]mployees awkwardly twisting, bending and extending themselves to lift items,” which puts workers at risk of hurting their lower back or succumbing to other musculoskeletal injuries.

This is just Amazon’s latest entanglement with OSHA, after the agency fined the digital giant $60,000 in December and launched an investigation when a New Jersey warehouse worker died on the job.

A rep for Amazon, which is planning to appeal the citations, said the company takes issue with OSHA’s findings.

“We take the safety and health of our employees very seriously, and we don’t believe the government’s allegations reflect the reality of safety at our sites,” Amazon spokesperson Kelly Nantel said in a statement email to Sourcing Journal. “We’ve cooperated with the government through its investigation and have demonstrated how we work to mitigate risks and keep our people safe, and our publicly available data show we reduced injury rates in the U.S. nearly 15% between 2019 and 2021. We also know there will always be more to do, and we’ll continue working to get better every day.”

Though OSHA apparently knows a violation when it sees one, it doesn’t actually tell employers how to optimize ergonomics, leaving many companies to try to figure it out on their own. Like any big business, Amazon has tweaked its warehouse operations over the years, installing adjustable tables and retooling ladders to try to help workers safely do their jobs.

Additional reporting by Jessica Binns.