Amazon predicts online shopping behavior will continue even after pandemic recedes

By Sayujya S, Desk Reporter
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American eCommerce giant Amazon, which benefited massively from a surge in online shopping during the COVID-19 pandemic, expects the trend to continue even as consumers get back to work and resume normal life.

This time a year ago, Amazon Chief Executive Officer Jeff Bezos warned investors that the spread of COVID-19 was going to be costly as they set up new facilities to meet demand from homebound shoppers and precautions to keep its operations running safely. Amazon hired hundreds of thousands of workers and continued to open warehouses at a rate of one every 24 hours.

The first quarterly report of 2021 shows those big bets continue to pay off. The pandemic has supercharged the retailer’s business, enabling the company to more profitably deliver packages, cloud-computing services and streamed movies.

First quarter revenues

First-quarter revenue jumped 44 percent to $108.5 billion and earnings were a record $15.79 a share, exceeding analysts’ estimates. For the quarter ending in June, Amazon projected sales between $110 billion and $116 billion.

“Fantastic quarter,” said experts. “Good all around and shows the staying power of changing consumer habits that will lean more toward digital.” The shares rose about 2.4 percent in extended trading. The stock has gained about 45 percent in the last 12 months.

Hopes pinned on Prime Day

Amazon said Prime Day, the company’s shopping bonanza for members of its $119-a-year speedy shipping program, will take place in the second quarter. That may help the company’s results look better compared with a period in 2020 when many people were in the midst of lockdowns and shopping almost exclusively online.

The company’s cloud-computing and advertising businesses, which generate bigger margins than the retail operation, are still growing rapidly. Sales at Amazon Web Services climbed 32% to $13.5 billion. The company’s Other segment, which is mostly ads, posted a 77 percent jump in revenue to $6.9 billion.

Tiff with employee union

Despite the strong results, Amazon prominently devoted long sections of its earnings release to all the good things the company says it’s doing for workers, small businesses and the planet.

Amazon’s recent tiff with a union that was stubborn on organizing one of its warehouses amplified the perception that it treats hourly workers unfairly. Climate activists have accused the company of spewing pollution into the neighborhoods its trucks and vans pass through. Moreover, global regulators and lawmakers are scrutinizing Amazon for what they deem anticompetitive behavior.

Related: Pandemic benefit: Google saves $1bn in 2020 as employees work remotely