Amazon posts biggest profit ever at height of pandemic
Source: Mintel 31-07-2020

International 31-07-2020

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Online giant Amazon earned US$5.2 billion in the second quarter, its biggest profit in its history, boosted by a 40% jump in revenue from a year earlier to US$88.9 billion, as online sales soared during the COVID-19 pandemic as stores were forced to shut during government-imposed COVID-19 lockdowns.

During the period, Amazon hired 175,000 people to cope with the increase in demand for its services. Online grocery sales tripled year on year, and worldwide streaming video hours doubled. Amazon forecasts net sales of US$87 billion to US$93 billion for the third quarter.

Mintel comment:

“Amazon’s performance in the second quarter is undeniably astonishing. Naturally, we were anticipating that the online giant would fare well with the COVID-19 pandemic and the corresponding surge in ecommerce sales. However, the results were even stronger than anticipated, with the group reporting record profits in spite of spending over US$4 billion on incremental COVID-19-related costs in the quarter.

In addition to hiring 175,000 additional staff to cope with the surge in online demand, Amazon has also stayed ahead of technological developments to cope with the required safety measures while increasing capacity. Among others, earlier this month the group reported the expansion of its Scout robot deliveries across the US, and was already using robots to sterilise warehouses and Whole Foods stores with UV lights during earlier stages of the pandemic. Amazon’s use of robots ties in closely with Mintel Trend Who Needs Humans?, which looks into how automated technology is increasingly leading to machines replacing people. We discuss this and Amazon’s overall performance in more depth in our upcoming Mintel report Online Retailing Inc. impact of COVID 19 – UK, July 2020.

Amazon’s recent initiatives also link to the rising trend of retailers supporting local and global communities under a sense of intensified interconnectedness during the pandemic. Amazon donated more than US$10 million of personal protective equipment to Direct Relief and Feeding America, in addition to partnering with food banks and schools to deliver more than six million meals to underserved families and vulnerable seniors. Not to mention some of the retailer’s more global initiatives such as the commitment co-founded by Amazon and Global Optimism to achieve net-zero carbon by 2040, a decade ahead of the Paris Agreement. We have seen a growing number of retailers from various sectors turning their attention to charitable and other good causes worldwide, and we think that brands supporting such causes right now will be remembered fondly in the long term.”