Amazon posted profit even during the lockdown measures while its competitors suffered heavy losses and shutdowns.
Despite lockdown measures being implemented and corona infections rising in the U.S., Amazon.com profits have hit a 26 year high. On Thursday, the company posted its revenue from online sales and businesses supporting third-party merchants. Shares of the biggest retailer in the US rose by 5 percent.
Meanwhile, the company’s rivals had to suffer due to lockdown measures. Brick-and-Mortar shut down many of its stores during the lockdown. Many other retailers across the country face a similar path to closing stores.
Amazon said the revenue increased by 40 percent from a year prior, it reported $88.9 billion last year. Earlier, the company forecast a dip in its revenue, as in the second quarter Amazon forecasted $4 billion expenditure on protective gear for staff and others related to the pandemic.
The company did spend around $4 billion for safeguarding its staff and operations from the pandemic. However, it still managed to earn $5.2 billion in profits, which is double the net income from a year earlier.
“This was another highly unusual quarter,” said Jeff Bezos, founder of Amazon. This year, Amazon shares jump up by 60 percent adding to the wealth of Bezos, the richest man on earth. He owns the highest share of the company and grew his wealth, while the S&P was virtually flat.
Online shopping has seen a rise amid the COVID-19 pandemic and is expected to continue. In the US, online shares have risen by 48 percent during the COVID quarter. This helped Amazon to make profits, besides, merchants paid extra during the lockdown to sponsor their products, in order to increase sales through loyal customers also added to the profits.
As companies start switching to virtual offices, demand for cloud services rises amid a pandemic. Amazon Web Services (AWS), which offers cloud data storage and computing power, raised its profits by 29 percent at $10.95 billion.
During the meeting, Brain Olsavsky, Amazon’s chief financial officer told the reporters that the profits have shocked Amazon. He added that at the time the company released a forecast for the previous quarter, people were looking for low margin products, mostly gloves, masks, and groceries. However, in Q2 the customers started to shift back to normal.
People stacked at home during the pandemic ordered groceries online and spent most of their time streaming videos. This helped the company grow profits as people were ordering through its delivery services and new subscribers grew swiftly, adding to the profit.
Prime Day, the company’s most lucrative summer move, was postponed in the US due to coronavirus. However, in India, the company announced the Prime Day 2020 dates as August 6 and 7.
In India, Amazon is focusing on digitising micro, small and medium-sized businesses. The company is trying to add more sellers and hiring at large scale. It is focusing on adding new features to help the digitisation move by the government.
Amazon also infused fresh capital of Rs 2,310 crores into Amazon India. Additionally, Amazon Seller Services received another tranche of Rs 2,208 crore this year. The company also announced its decision to invest $1 billion as part of its investment pledge.
On its Indian website, Amazon launched ‘Local Shops’ where shopkeepers and retailers can register to serve more customers from their locality. According to the company notification, 10,000 sellers have joined the program and are serving customers locally.