Pandemic provides Amazon with fortunes and headaches
Amazon has spent years honing the business of packing, shipping and delivering millions of products to doorsteps around the world.
Now it audience.
With much of the globe in various stages of a lockdown because of the coronavirus pandemic, the world’s largest online retailer has become a lifeline to many shoppers. But it is also grappling with delivery delays and mounting complaints from workers who worry about contagion while on the job.
The company’s website hit 2.54 billion visitors for all of March, according to online research company Comscore. That marks a 65% jump from the same period last year.
On Thursday, Amazon reported its profit fell 29% in the first quarter as costs for shipping millions of packages to home-bound customers rose. But sales soared as more people opted to shop online during the pandemic.
The company reported net income of $2.54 billion in the first quarter, compared with $3.56 billion a year ago. Revenue rose 26% to $75.5 billion, beating expectations of $73.7 billion.
Discounters like Walmart and Dollar General that sell essential products have seen their shares soar 8% and 15%. respectively. But Amazon has been a standout, with its stock up 22% so far this year in contrast to the S&P, which has slid 11%. Amazon is also hiring 175,000 more workers at a time when many businesses have cut back and are seeking federal aid.
But Amazon’s vast empire is showing cracks. Deliveries that used to take hours to arrive can instead take weeks or even months. has
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High-demand items, like toilet paper, are frustratingly out of stock.
Probably the biggest issue facing the $1.1 trillion company is persistent complaints by warehouse workers of grueling hours of backbreaking work with little protection against catching the coronavirus. A growing number of infections has increased pressure on the company to take steps that could further slow down operations, including shutting down some warehouses and easing productivity quotas.
“Amazon has gone from a nice-to-have to a necessity,” said Jon Reily of Isobar, a global digital agency. “It’s becoming a public utility like the electric company or the water company.”
The most dramatic fallout came in France when a court ordered Amazon last week to stop delivering non-essential products for a month while it works out better worker safety measures. An appeals court upheld the ruling, although it expanded the number of products the company is allowed sell. Amazon responded by closing all its French warehouses, saying it is too complicated to separate out its activities.
Small groups of workers have staged walkouts at Amazon warehouses in
New York, Chicago and Detroit, demanding that the facilities be closed for deep cleaning after workers there tested positive for the virus. Kentucky’s governor ordered a warehouse in Shepherdsville closed for several days last month after workers there got infected.
Amazon has refused to say how many workers have fallen ill. It says it has stepped up protection measures, ramping up cleaning, implementing temperature checks, racing to distribute masks, staggering shifts and spreading out tables in break rooms.
Many shoppers have been forgiving of Amazon, in large part because there are few better alternatives for getting essentials online.
“That’s the only place you can shop for most everything you need,” said Marlina Fol, a caregiver in Manhattan.
Craig Johnson, president of retail consultancy Consumer Growth Partners, says Amazon has a “high class problem” considering how many other stores have gone dark.
“Given all that is going on, they have done remarkably well,” Johnson said. “Yes, there are glitches. But there are glitches all over. We have never been through this.”