By delivering a diverse range of products to people’s homes, where many people have been effectively trapped this year, Amazon has gone from huge to humungous, reaping almost unfathomable financial rewards and making founder Jeff Bezos rich to the tune of $182 billion.
The impact of the coronavirus
To say that the coronavirus has had an impact on all of our lives would be an understatement, and the same could be said of the effect it has had on the fortunes of Amazon. Amazon struggled in the early days of the pandemic, but after resolving early supply and pricing issues, the seismic shift in the way people bought goods and services turned Amazon into a lifeline for everything from toilet paper and hand sanitizer to home workout equipment and even inflatable swimming pools.
Amazon wasn’t the only tech firm to benefit from the pandemic. The popularity of video conferencing platforms such as Zoom, Google Meet, and Microsoft Teams soared while streaming services such as Netflix and YouTube also received a sizable boost.
It hasn’t all been plain sailing
Although the financials might tell one story, the pandemic hasn’t been all plain sailing for the online retail giant. A new scam targeting Amazon customers brought the security of the firm into question. Some customers received calls, purportedly from Amazon, claiming that their accounts had been hacked, with some victims losing thousands of pounds. Amazon customers have also been targeted by advanced-fee fraud, which is something customers of other tech firms such as the well-known online lender Wonga have also been affected by. Brands with large established consumer bases and an exclusively online based service are ideal targets for scammers to try and masquerade as.
Fig. 1 above: Advanced fee scam fraud awareness guidelines sent to loan customers.
Amazon’s monumental success also attracted the gaze of the regulators, who started to become concerned that the retailer might be becoming too powerful. There have also been concerns about the lack of coronavirus protections in Amazon’s warehouses, with some workers staging protests and employees even being fired for speaking publicly about their working conditions.
Turning the situation around
Despite a few bumps in the road, Amazon has turned the situation around by investing heavily in personal protective equipment for its workers and getting its delivery times back under control. The result has been profits of $6.3 billion in the third quarter of 2020 alone, and that’s after Covid-19 related costs of $2.5 billion had been taken into account.
Amazon has also invested in improving working conditions in its warehouses and boosting the public’s perception of the way workers are treated. It has announced Christmas bonuses of $500 million for its frontline staff, which is on top of a $500 million thank you bonus that was awarded earlier on in the year.
What’s next?
So far this year, Amazon has posted profits of $14.11 billion on revenues of $260.51 billion. That’s likely to increase the scrutiny from the regulators, with further questions to answer about Amazon’s treatment of third-party sellers and antitrust charges relating to its use of merchants’ data on its platform.
Although increased regulatory scrutiny will become part of the backdrop Amazon must perform against, as we continue to turn to the world’s largest retailer for everything from Christmas presents to ice-cream makers, diapers and everything in-between, there’s no sign that its success will be dampened anytime soon.