The Covid-19 pandemic has upended our lives, forcing us to live digital lives rather than physical ones.
Unsurprisingly, perhaps, Amazon.com Inc. reported soaring quarterly sales because of a surge in online orders from homebound customers contending with the coronavirus pandemic—as reported by The Wall Street Journal and Passive Guy.
The tech giant said Thursday that revenue rose 26% from a year earlier to $75.5 billion in the three months through March—by far the highest on record for what is usually Amazon’s slowest period of the year.
The boom in sales came at a cost, though: profit fell 29% from a year earlier to $2.5 billion, well short of analysts’ average estimate of $3.26 billion. Operating profit for the quarter also missed the estimate Amazon gave in January.
The results, which follow relatively robust earnings reports by several other big tech companies in recent days, reflect the central role Amazon has played during the coronavirus crisis, delivering goods to people stranded at home by government shelter-in-place orders.
The surge in online buying taxed Amazon’s fulfillment centers, which saw unprecedented volumes for this part of the year. In response, Amazon temporarily stopped taking inventory for products deemed nonessential and announced plans to hire 175,000 more staffers for its warehouses and delivery network. Amazon said it ended the quarter with 840,000 employees.
How are others doing?
Amazon’s results came on the same day Apple Inc. reported an unexpected uptick in revenue, with strong sales of services balancing out weakness in demand for iPhones and other devices.
Microsoft Corp., the world’s most valuable publicly-traded company, reported strong growth in quarterly sales and profit, with gains in areas from business software to videogame consoles.
Facebook Inc. and Google parent Alphabet Inc. also both reported higher profits and increased use of their services, though both saw weakening in their online advertising revenue as the pandemic spread.
Even so, and with the exceptions mentioned above, Amazon’s booming sales stand in stark contrast to many companies across the U.S. economy, which shrank in the first quarter at its fastest pace since the last recession: the Dow Jones Industrial Average has fallen nearly 15% this year.
The pandemic has broadly been a boon for sales at retailers with strong e-commerce abilities but devastated those that rely on bricks-and-mortar operations. Department-store chain J.C. Penney Co. Inc. is negotiating for bankruptcy funding and Macy’s Inc. has said it was furloughing most of its roughly 125,000 employees—though Macy’s said Thursday it plans to reopen some of its department stores next week in states that have loosened restrictions.
Why this matters to you
I agree with The Passive Guy that Amazon’s reliability and credibility as a seller may well be enhanced in the eyes of most buyers going forward. If this is correct, the “Don’t Buy from Nasty Amazon” meme so beloved by Big Publishing and many physical bookstores is going to lose even more credibility in the future.
This will improve its image with the public, especially since Amazon is willing to get through this Covid crisis by adding just about more employees than anyone else. Amazon expects to spend around $4 billion on coronavirus-related costs like employee testing and increased wages. It has already spent more than $600 million on such costs in the first quarter.
Amazon also spent heavily in the quarter hiring more employees and temporarily raising the pay of essential workers by $2 an hour.
This is paid, in part, by Amazon’s advertising business, which has up well, with sales in the latest quarter rising 43.8% from a year earlier to $3.9 billion. The unit, which sells ad space in the form of sponsored products in search and display ads, has become another cash cow for the company in recent years.
For all intents and purposes, it’s a good time to publish your book with Amazon!
Nicholas C. Rossis 
I don’t know. There have been a lot of complaints in terms of reliability and credibility. Prices have been higher than normal on necessities like toilet paper. Delivery dates have been longer and inconsistent. I’m still waiting for things I ordered weeks ago like masks and gloves. It doesn’t help that Bezos is becoming even richer while many are losing their jobs. Amazon is primarily being used because it’s the only option and many feel they’ve taken advantage of that instead of doing anything to make things easier during these times. As far as book sales go, is there an uptick? Just because Amazon is selling more in Pantry, Video, and electronics doesn’t mean it carries over to books. I’ve seen many indie authors push their books hard since this started and complain that things are even worse. Streaming services are syphoning a lot of the attention. Many of those that go for books are heading for the big series they always wanted time for like Harry Potter and Stephen King. Sorry to be a downer, but I’m really not seeing many indies getting a boost even with advertising.
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Thanks for the counterpoint, Charles! I think most people will be more forgiving toward Amazon than they have been in the past. But I’m curious to see how it plays out.
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Me too. At least here, Amazon gets a lot of heat due to Bezos. Reports that he’s making tons of money while millions are losing their jobs brings a sour taste to our mouths.
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I’m sure those reports have nothing to do with his feud with the current administration.
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It’s not though. That’s his own released finances. Besides, with so many more people needing to go through Amazon, Bezos is bound to make more money. Yet, he isn’t doing much to help. Several outlets have reported that an Amazon VP quit because employees who protested for safer conditions have been fired. So, it doesn’t have anything to do with the current administration.
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I’m curious to see how Bray’s resignation plays out. I hope it sparks meaningful changes to the company. Even so, it feels that a lot of the noise against Bezos – and Amazon – is politically motivated.
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Yes and no. There is some political motivation against him, but it’s become more due to his wealth and avoiding taxes. He’s become the poster child for the billionaire class that gets all the loopholes while making money off those who are struggling to survive. There’s also been a documentary or two showing the working conditions of his employees. For Amazon itself, it’s always been a giant that people use while hating for things.
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That’s a good point. Amazon should treat its employees better and pay way more taxes. Also, brick and mortar stores are suffering all over the world and Amazon is part of the reason why.
But then again firms like Apple also pay peanuts in taxes. also, farming and manufacturing are also suffering – and Amazon has nothing to do with that. It’s just easier to focus people’s fears and frustrations on a behemoth like Amazon than to prepare for an uncertain, scary future. If it suits one’s political needs, even better.
This article’s point was that, while I agree that Amazon has been under fire for a while, I believe that the pandemic will mute some of that criticism and enhance the company’s image by shifting attention from the negative press you rightly point out to its being a lifeline for many at a time of crisis.
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I guess it depends on where you are. Some places many become more positive towards Amazon while others more negative. Since Bezos is an American billionaire, we probably look at him and his company differently. Especially with the rise of Sanders and his dream. It doesn’t help that Bezos doesn’t do a lot except make money and buy other businesses. So, he doesn’t have a lot if good press here. For example, Warren Buffet and Bill Gates have their philanthropy. Bezos buys a mansion with 25 bathrooms. It’s a bad look when the people who are giving him money are having trouble surviving. There really hasn’t been anything done by Amazon to alleviate this situation too.
People hate Apple too for the same reasons. It gets called out on that a lot, but Tim Cook isn’t seen in the same light as Bezos. He also came out to say the company was going to help their employees keep their jobs. Bezos has been silent and his company has fired those who protest. Not a good look.
While Amazon has been a lifeline in many instances, it is overshadowed by the negatives here. Takes weeks to get things if they show up at all. They’re constantly out of essentials that might not make it to you even if the site says it’s there. One thing I realized after a while is that they’re only a lifeline because they took over the game. Yet, they really aren’t doing anything extra to help. They’re just there doing what they always do, but with more emails about how to get refunds.
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Well, it will be interesting to see if that changes because of the pandemic.
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It’ll be different in various areas.
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Some interesting thoughts but I suspect that it might not be quite the Amazon love-in you suggest. The negative publicity surrounding its supposed handling of workers’ safety and accusations of violating workers’ rights may not die away quickly. Particularly if more senior company insiders bemoan the “toxic” corporate culture.
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Thanks for the counterpoint! You make some good points. I think that people will be more tolerant of Amazon than they have been in the past but I wouldn’t suggest a love in 🙂
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I think your analysis is sound and that they’ll emerge from this crisis bigger than ever. That said, becoming so globally dominant will present its own challenges, as history has shown us that governments and people eventually start clipping at a behmoth’s wings 😉
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That’s a good point, especially with Bezos being at loggerheads with the current administration.
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All I know is that Amazon, with small assists from my local Publix, and my local Walmart, have kept us supplied with everything we’ve needed throughout the TEN weeks I’ve spent under “house arrest.” I’ve found 95% of the items I was looking for on Amazon, at fair prices compared to what I’d been paying at local stores, and out of several hundred orders, only one failed to show up. (Pretty sure it was delivered to a residence a few miles from me with a very similar address.) And even with that one, I promptly received a full refund.
Add that to the fact that without Amazon, I wouldn’t even BE a writer, and I’m on their side. I am far to old to be pitching manuscripts to traditional publishers for months or years on end, so I don’t care how much money they make, as long as they do it honestly, and play by the rules. If they need to improve in some areas, fine. I’m sure they’ll do what they need to. But overall, the better Amazon does, the better I do. And I don’t know how we would have gotten by over the last ten weeks without their excellent service. They have my heartfelt gratitude.
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Thank you, Marcia. I suspect you’re not the only one feeling that way toward Amazon!
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Like Marcia, I haven’t so many years of life left. We oldies need to get our books out there as quickly as possible. There are problems with Amazon, true, just as there are with other mammoth companies.
Take Apple. They force you to buy new products because after a very short while they stop updating their iPhones, iPads, Macbooks etc. Then apps stop working, or don’t work properly so you HAVE to buy a new one. That’s happened with my iPad. I can no longer use it to write as it won’t support any writing apps, nor dropbox. Even something as silly as a game won’t work properly. It keeps kicking me out. A friend of my son had to buy a new laptop because of this.
I can still read my books and pick up emails and search the net, but that’s about all, now. And Amazon aren’t the only ones to try to get out of paying tax. How many ordinary people try to minimize the tax they pay?
Amazon seems to get all the stick. I’ve found it useful in this lockdown. It was the only place I could get bread flour and yeast. (I usually make my own bread, so it was frustrating that all the world decided to stockpile something they don’t usually use.)
Yes, there are problems there, but aren’t there problems in many, if not most, companies? If you ask people who work there, they’ll often tell you not to buy from them. I know someone who worked for Next who will never buy from them as he knows what goes on.
I can’t help but think it’s all about how rich Besos is as much as anything. But unlike many of the very rich, he made it himself, not inherited it. Do we no longer admire hard work and success? So many people seem to hate anyone with money these days. (Except, bizarrely, Mr Trump, who is loved by many, apparently, but those who dislike him don’t do so because he’s rich.)
Sorry this is so long. I got carried away!
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Loved the comment, and I agree. Amazon has been under fire for a while now while other, just as guilty, parties seem to get away with murder. It’ll be interesting to see if this changes because of the pandemic.
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I hope Amazon starts treating its staff better. I still won’t use them. Cheers, Jon.
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Thanks for sharing your feelings, Jon!
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Pingback: COVID-19 Enhances Amazon’s Reliability and Credibility — Nicholas C. Rossis – THE MONAE GROUP
Reblogged this on Kim's Musings.
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I’m not sure of how the rest of the world feels about Amazon, but I love them. I’m one of those strange women who doesn’t like to shop, so it’s convenient for me. The good part, they push other stores to go that extra mile, but the worst part, they hurt small retail stores. Online purchasing is the future. I heard even before computers were in every household (the early 1980s) that one day everyone would be ordering everything from their television screens and physical stores wouldn’t exist. At the time, I didn’t see how that would be possible, but now I do.
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How true! The future is here, as I always say 🙂
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I want to correct myself about Amazon hurting the business of small retail stores. Not all of them. I can see where Amazon may help many of them. It gives them an online outlet to sell, should they wish to, through Amazon. Without Amazon and other stores like them, the post office would probably be out of business by now.
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That’s a good point. In much of Europe, the postal service is subsidized to avoid that.
Brick and mortar stores are suffering all over the world and Amazon is part of the reason why. But then again so is farming and manufacturing and Amazon has nothing to do with that. It’s just easier to focus people’s fears and frustrations on a behemoth like Amazon than to prepare for an uncertain, scary future.
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Reblogged this on Author Don Massenzio and commented:
Check out this insightful post from Nicholas Rossis’ blog on how COVID-19 Enhances Amazon’s Reliability and Credibility
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Personally, I’ve found Amazon unusually slow to respond to orders. No doubt due to the crush of sales you mention. I remain skeptical about this company because of how they treat their workers.
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Thanks for that, Deby! Many seem to share your feelings. I wonder if that will change because of the pandemic.
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Personally, I’m skeptical of any company that is so big you “have” to go through them. I’m also wary of Microsoft, Google, and some others. But in the immediate context, it’s the labor conditions that are getting my back up. Union organizers being fired? Not a good look, as they say.
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Even worse, in this case, as it looks like a couple of people got fired because they were protesting the lack of covid-related safety measures. An Amazon VP resigned in protest over the firing, thus helping make this big news.
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I do feel like the rights of workers have been trampled all over the world in our rush to globalize trade. It would be nice to see some real change in labor law come out of this.
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I live in Greece, a country where the left has been governing for years. Labor law has become so inflexible that it has stifled the economy and created a two-tier system: it’s practically impossible to fire anyone, which makes it almost impossible to get hired. That’s why there’s high unemployment. Companies prefer to hire people for short-term contracts and rehire them for as many times as the law permits before they have to hire them permanently. They then let them go for good, which means they need to train someone from scratch.
My point is that this is a complicated issue and labor law alone is not enough. Indeed, it can make things worse.
It feels like what we need is a new social contract. I, for example, am much in favor of a universal income (https://en.wikipedia.org/wiki/Basic_income).
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We’ve heard about how hard it is in Greece. Unions in the US are not nearly that strong. In fact, Conservatives keep talking about “buy American” while rolling back bargaining rights and undermining workplace safety. I’m open to the concept of a universal income, but I have a lot of questions about imllementation. Complicated issues, for sure.
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As always, the devil’s in the details.
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To put the opposite point of view, during the pandemic, we have found Amazon’s response time excellent.
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Me too, Viv. I think they were a lifeline for many people.
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