What Amazon Is Doing for Its Customers

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What Amazon Is Doing for Its Customers

05/01/2020

Amazon's First Quarter Results

  • Amazon reported earnings of $2.5 billion, or $5.01 a share, for the first quarter ended March 31, down from $3.56 billion, or $7.09 a share, in the year-ago period. Analysts had estimated $6.23 a share.
  • Revenue grew 26% to $75.5 billion, topping estimates, from $59.7 billion in the year-ago period.  
  • Operating income decreased to $4.0 billion in the first quarter, compared with operating income of $4.4 billion in first quarter 2019.
  • Revenue from AWS increased 33% to $10.22 billion and operating income from AWS rose 38% to $3.08 billion. It accounted for 77% of Amazon’s total operating income. 
  • For the second quarter, net sales are expected to be between $75.0 billion-$81.0 billion, or to grow between 18% - 28% compared with second quarter 2019. Amazon said it could report operating losses of up to $1.5 billion. This guidance assumes approximately $4.0 billion of costs related to COVID-19.

Not surprisingly, Amazon’s first quarter saw a 26% spike in revenue amid the coronavirus and shelter in place mandates. The real bombshell dropped in the e-commerce retailer’s results came from CEO Jeff Bezos.

Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money,” stated Bezos. “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.”

The estimated $4 billion includes investments in personal protective equipment, enhanced cleaning of its facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop its own COVID-19 testing capabilities. 

“There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees,” Bezos said. 

Additionally, Amazon.com Inc has told staff whose job can be done from home that they can do so until at least Oct. 2.

In addition to outlining how Amazon plans to help employees, the retailer also detailed several moves it’s making to help its customers, which include:  

  • Prioritizing the stocking and delivery of essential items to ensure the fastest delivery of household staples, medical supplies, and other critical products.
  • It has removed over one million offers from its stores due to COVID-based price gouging and suspended more than 10,000 selling accounts globally for violating our fair-pricing policies.
  • Amazon says it’s working hard to increase order capacity for Prime Now, Amazon Fresh, and Whole Foods Market. It has expanded Whole Foods Market grocery pickup from roughly 80 stores to more than 150, adjusted store hours for select locations to focus exclusively on fulfilling online grocery orders during certain times, and has made it easier for customers to see when the next delivery window is available on the Prime Now, Amazon Fresh, and Whole Foods Market homepages.
  • It has implemented additional safety measures within Whole Foods Market stores, including providing plexiglass barriers between cashiers and customers at checkout, rolling out enhanced cleanliness and sanitation protocols, and enforcing social distancing guidelines.
  • Whole Foods Market locations are open to seniors one hour before opening the store to the general public, and the first hour of grocery pickup at select Whole Foods Market locations is reserved for seniors.
  • Alexa is helping customers stay informed and connected, and can now answer tens of thousands of questions related to COVID-19. Amazon said it’s working to provide accurate and timely information from official government and news sources, globally. Alexa also provides an experience that helps customers in Brazil, Canada, India, Japan, Mexico, and the U.S. check their risk level for COVID-19. Customers can ask, “Alexa, what do I do if I think I have COVID-19?” or “Alexa, what do I do if I think I have coronavirus?” Alexa then asks a series of questions about the person’s symptoms and possible exposure and provides guidance sourced from local health authorities.
  • To support third-party sellers in Amazon’s stores, many of whom are small and medium-sized businesses, Amazon Lending loan repayments have been paused from March 26 to April 30. In recent weeks, it has also waived one month of fees for long-term storage, Strategic Account Services account management, and the Launchpad program, as well as two weeks of inventory storage fees.
  • Amazon is supporting small businesses by partnering with American Express and its Stand for Small initiative, providing free use of business tools that help with virtual communication and collaboration, such as Amazon Chime, Amazon WorkDocs, and Amazon WorkSpaces, as well as enabling small businesses to use the cloud at no charge for 12 months with AWS Free Tier. We’re also giving complimentary access to training and educational tools from the Amazon Small Business Academy to help entrepreneurs learn how to build their businesses online.
  • AWS is helping healthcare workers, medical researchers, scientists, and public health officials working to understand and fight COVID-19 by providing a centralized repository of curated, up-to-date, pre-processed, and publicly-readable datasets focused on the spread and characteristics of the virus. The AWS COVID-19 data lake, which includes data sets from Johns Hopkins University, Definitive Healthcare, Carnegie Mellon’s Delphi Research Group, and other sources, is available for anyone researching, tracking, deploying vital resources, or developing other helpful solutions and applications to combat COVID-19.
  • In collaboration with Salesforce, AWS is participating in the “Salesforce Care” campaign, a program to onboard up to 300 customers, like HCA Healthcare and Providence Health & Services, to help them quickly stand-up call center capacity to handle the spike in demand from their patients.