Amazon might be losing out on money, CEO Jeff Bezos was quoted as saying in an AP report. Bezos, on Thursday, told investors to hold on tight as his company is navigating “the hardest time we’ve ever faced”.
The e-retailer giant might be facing a surge in online shopping activities thanks to more than half of the globe being under lockdown, but the company is spending more to keep their delivery personnel safe from contracting COVID-19.
Amazon saw profit shrink and said it may incur a loss in the current quarter as it boosts spending to keep logistics operations running smoothly during the coronavirus pandemic. Bezos said under normal circumstances, they would expect to make more than $4 billion in profit.
Any profits made during this time, however, will be redirected to safety measures like disinfecting Amazon’s warehouses, pay workers overtime, to buy masks and other safety. Unit sales surged 32 per cent in the first quarter—the fastest pace since the fourth quarter of 2012.
As per data compiled by Bloomberg, sales increased 26 per cent to $75.5 billion in the quarter that included the outbreak of Covid-19 in the US and generated a revenue of $73.7 billion.
The pandemic actually worked in favour of the company that prioritised in stocking essential goods and have been one of the few retailers that have been able to operate relatively normally during the crisis.
Amazon spokesman Dan Perlet said, “Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money.” And added that shareowners might need to take a seat as, “because we’re not thinking small." Perlet, however, refused to disclose the number of COVID-19 cases in the company’s ranks.
Amazon hired 175,000 people to try to keep up with the rush of orders and is paying workers an extra $2 an hour. Many Amazon workers have opted to stay at home as they worry that they may contract the virus and some of them have protested what they said were unsafe conditions.
In France, a court closed all six Amazon warehouses, saying the company did not do enough to protect workers, even as the company maintains that they have provided workers with face masks, has been checking temperatures and taking steps to ensure that the workers maintain social distancing norms.
In the past, Amazon’s big investments, in new data centres to expand its cloud-computing business and warehouses to expand its e-commerce capacity, have paid off for investors by leading to increased revenue, but it’s not clear that will be the case with spending in response to the pandemic, Brian Yarbrough, an analyst at Edward D. Jones & Co was quoted as saying in a Time Magazine report.
Its revenue from cloud computing business, which helps powers video streaming site Netflix and other companies, rose 33 per cent and its revenue from Whole Foods rose by 8 per cent. According to Yarbrough, Amazon is said to have a choppy history and investors have given them a lot of leeways because they’ve harvested the benefits of those investments later.
