Amazon investors have said they will ‘take a seat’ as demand rockets
Amazon investors have said they will ‘take a seat’ as demand rockets, Amazon’s revenue increased in the first three months of the year as the coronavirus shutdown improved demand for the company’s grocery stores, online shopping, and cloud services.
Sales jumped 26 percent year-on-year in the quarter and the company said they could grow another 28 percent in the next year.
But internet giant has been squeezed by demand.
It said it would spend approximately $4bn (£3.2bn) through June on coronavirus initiatives.
Those costs reflect increased worker pay, purchases of masks and other protective gear, expenses related to cleaning and less efficient warehouses, as the firm implements social distancing measures.
“The current crisis shows Amazon’s business’ adaptability and resilience like never before, but it’s also the toughest time we’ve ever met,” Amazon chief Jeff Bezos said.
“If you’re an Amazon shareholder, you may want to take a seat, because we don’t think we’re small,” he said.
“I am sure that our long-term shareholders will appreciate our strategy, and support it.”
With its supremacy in e-commerce, video sharing and cloud computing services, plus its purchase of the Whole Foods supermarket chain, Amazon is well positioned to take advantage of the pandemic-forced shifts in consumer habits.
The online giant posted companywide gains. The e-commerce company rose 24 percent, while revenues in its cloud computing division were up 33 percent, with Amazon Web Services, a big profit driver. Also it did well with its advertisement network. And at Whole Foods, bought by Amazon in 2017, revenue grew by about 8%.
That success contrasts sharply with many other businesses that are reeling amid forced closures and plunging consumer spending as economists expect the sharpest recession in the world since the 1930s.
“No-one should be surprised,” retail analyst Sucharita Kodali of Forrester Research said. “A lot of physical stores around the world have been closed and that drives a lot of people online and they’re a huge online recipient.” From a customer perspective, Ms. Kodali said the performance of Amazon has been somewhat lacking, with slower shipping times and lots of items off stock. The reputation has also wrestled, as staff around the world complain about inadequate health precautions.
Despite these problems, Ms. Kodali said she expected the company to retain its long-term advantage as competitors who experience losses due to closures are discouraged from making investments that would help them succeed.
“All signs point to the continued triumph of Amazon-not because of something Amazon has done, but because of what the others can not do,” she said.