Blog Post - Hugh Fletcher, Jul 31 2020

Amazon reports record quarterly profit despite spending $4bn (£3bn) on Covid-19 costs

Amazon reports record quarterly profit despite spending $4bn (£3bn) on Covid-19 costs

Results just out from Amazon report sales up by 40% and profits by 100% in the second quarter of its financial year – despite spending $4bn (£3bn) on Covid-19 costs including making its warehouses and logistics secure. Amazon online grocery sales also tripled. More here.

Hugh Fletcher, Head of Thought Leadership commented:

“Amazon has had a strong performance during lockdown due to its ability to continue to provide a service to customers, with an unrivalled worldwide infrastructure and access to stock that is second-to-none. Before the pandemic, 75% of consumers said they wished brands and retailers offered similar services to the eCommerce giant, highlighting the grasp it already had on shoppers. And over the years it has managed to successfully extend its products and services, from non-essential items to grocery and even a recent foray into gaming – offering customers a speedy online experience that satisfies all needs.

We recently found that over a third (35%) of all online shopping was conducted through Amazon’s marketplace during the lockdown period, reinforcing the company as the big retail winner in the wake of the COVID-19 pandemic. This rapid increase in market share may well be offset by rising costs over Q2 and the remainder of the year, but the pandemic has already conditioned consumers further towards Amazon. One-in-five (20%) consumers said they intend to purchase more with Amazon after the pandemic has passed, despite 21% expressing worries about its ongoing dominance.

With Amazon making clear headway over its rivals, the focus will likely turn to the company’s image. The business outgoings may have risen to introduce extra measures that prevent the threat and potential spread of COVID-19 to frontline workers – but they are necessary investments and will be well-received by its customer-base. The company still has a long way to go in its journey towards social responsibility to improve consumer trust, reduce its global carbon footprint and improve its equality processes. If Amazon and Jeff Bezos can maintain a positive image throughout the COVID-19 pandemic, it has the potential to grow its market dominance even more.”

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