World News – CA – Amazon sees pandemic boost holiday sales, delivery investment


(Reuters) – Amazoncom Inc on Thursday announced an increase in holiday sales – and costs related to COVID-19 – as consumers continued to buy more online during the pandemic

A company executive added that the increase in spending on delivery infrastructure would likely continue over the years, with stocks falling 2% in after-hours trades

Since the virus outbreak began in the United States eight months ago, consumers have increasingly turned to Amazon for the delivery of groceries, household items and medical supplies Brick and mortar stores have closed; Amazon, on the other hand, decided to recruit more than 400,000 workers and earned $ 6.3 billion in the quarter just ended, its second consecutive record profit

This has kept the world’s largest online retailer at the center of political and workplace uproar Democratic politicians this month accused Amazon of wielding « monopoly power » over merchants on its platform, this month. The company disputes Meanwhile, more than 19,000 of Amazon’s U employees have contracted COVID-19 and some staff have protested for the site’s closure

Amazon’s response now includes around $ 4 billion in costs related to COVID-19 on this holiday, up from $ 2.5 billion last quarter It tests employees for the virus and obtains protective gear for new hires It also works less productively due to social distancing in its warehouses, which accounts for a large portion of its spending during a pandemic, CFO Brian Olsavsky said on a call with reporters.

Amazon forecasts operating profit of between $ 1.0 billion and $ 4.5 billion, within $ 5 billion analysts were looking for, according to research firm FactSet

This holiday competition remains fierce for the company in retail – and in the cloud Amazon Web Services (AWS), a traditional cloud computing division, is in a duel with smaller rival Microsoft Corp for business with high potential during the pandemic, from remote work to cloud gaming

In the just-ended third quarter, AWS sales grew 29%, while Microsoft reported a 48% increase in revenue for its Azure cloud

Yet Amazon sales are set to hit an all-time high Jeff Bezos, Amazon CEO and richest person in the world, said in a press release, “We’re seeing more customers than ever buying early for their Christmas presents, which is just one of the signs that this is going to be unprecedented holiday season « 

The company said customers at its loyalty club Prime are buying more often, renewing subscriptions at higher rates, and internationally, turning to Amazon more for video entertainment Merchants also increased their budgets for advertising on Amazon in the third quarter, against a contraction during the pandemic’s spring peak

The question for some analysts was whether Amazon’s consumer division could keep up with the still growing purchases during the pandemic

The company has long worked to avoid a repeat of the 2013 season when delays left some without gifts on Christmas Day Amazon is now handling more shipments in-house, and this year it has moved its marketing event Prime Day – usually July – October, allowing customers to place holiday orders earlier

CFO Olsavsky told reporters the company is « not totally isolated » from challenges its delivery partners may face this quarter, even as the online retailer feels ready for the holiday season. of year

« We believe that capacity will be limited industry wide, and we are no exception to that, » he said « Buyers are responsible for making their purchases early »

Olsavsky said on a call with analysts that Amazon’s square footage and logistics will be 50% higher this year He said the company has already spent a lot to expand its transportation capacity , part of some $ 30 billion in capital spending and rentals in the third quarter The increased investment in transport is likely to continue in the years to come, he said

For the fourth quarter, Amazon announced that it was forecasting net sales of $ 112 billion to $ 121 billion This would mark the company’s first $ 100 billion surpass and follows revenue above the third quarter that analysts like eMarketer’s Andrew Lipsman did not expect

« While it was clear that the switch to e-commerce caused by the pandemic would keep Amazon’s revenue high, it surprised by easily exceeding the already high bar, » Lipsman said

Report by Akanksha Rana in Bengaluru and Jeffrey Dastin in San Francisco; Editing by Vinay Dwivedi and Grant McCool

All quotes have been delayed by at least 15 minutes See here for a full list of exchanges and delays

Amazoncom, NASDAQ: AMZN

News from the world – CA – Amazon sees pandemic boost vacation sales and investment in delivery



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