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Amazon hopes pandemic habits stick after profits triple

Amazon hopes pandemic habits stick after profits triple thumbnail

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Amazon continued to cash in on our new shop-work-relax-from-home habits in the first three months of this year, reporting a huge rise in sales and a tripling of profits.

Almost every aspect of the Covid-19 pandemic has served to boost the tech giant’s revenues, from video streaming to grocery delivery.

It said it expects the boom to continue over the next few months.

The pandemic could herald “a golden age” for Amazon, one analyst said.

Amazon’s are the latest blow-out results from Big Tech this week. Apple, Facebook, Microsoft and Google’s parent firm Alphabet have all reported big sales increases a year after the start of the Covid-19 pandemic.

The Amazon group has continued to spread its reach into automated grocery stores, online healthcare services, even experimenting with a bricks-and-mortar hair and beauty salon in London.

But its core offerings: online shopping with home delivery, media streaming and cloud-based web-services all flourished during a year of upheaval for other businesses.

Revenue rose from $75bn (£54bn) this time last year to $108.5bn for the three months to the end of March.

Profit was $8.1bn, up from $2.5bn a year ago.

Chief executive Jeff Bezos highlighted the streaming service Prime Video and AWS, the web-services division, and said he was “proud to have them in the family”.

“As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year,” he said.

He said AWS had grown in its first 15 years to deliver $54bn annual sales “competing against the world’s largest technology companies.”

Mr Bezos is stepping down as chief executive this summer, though he will remain in the less hands-on role of executive chairman. He will be succeeded by AWS’s chief executive Andy Jassy.

image copyrightReuters

image captionJeff Bezos will step back from the chief executive role later this year

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said Amazon’s results were “stellar” particularly given the extra costs associated with doing business during the pandemic.

“Amazon’s modus operandi has always been to pour internally generated cash into new investment opportunities wherever possible – but at present it seems to be struggling to find homes for its embarrassment of riches,” he said.

“This could be a golden age for the group. With high streets shut, Amazon is a natural home for consumers’ spare cash, AWS services remote working, which has suddenly become the norm, and tech wizardry is all the more useful when we can’t see friends and family in person.”

Amazon said although the pandemic was receding in some markets it expected its sales and profits to continue to grow, and it still expected a further $1.5bn costs related to Covid-19.

The firm has announced it plans to raise pay for its half a million US employees at a cost of more than $1bn. The firm has faced long-running criticism over pay and working conditions, including claims that workers are under so much pressure they can’t take toilet breaks and that it was failing to keep warehouse staff safe from coronavirus infection.

Amazon also announced a raft of measures to support employee health. It has already rolled out vaccinations to 300,000 employees and contractors in the US and “will soon expand to frontline employees in other countries”.

The group will continue to extend its range of shopping services and platforms, including Amazon Scout, a fully electric autonomous delivery system that “rolls down the sidewalk at walking pace and delivers items right to customers”. Scout is already operating in four US states.

Other recent innovations include Amazon Pharmacy, which allows Amazon Prime members to save money on prescriptions, Prime Wardrobe which offers personal shopping services and Discover Rooms, which the company described as “an immersive shopping experience that helps customers browse and shop from thousands of home room designs”.

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