Tuesday May 05, 2020 |Notes

Supercharged growth at Amazon

During the coronavirus pandemic, Amazon has become more vital to many lives as a reliable and safe method of obtaining necessities. Last week, Amazon released their Q1 results and as expected, sales surged with an increase of 25% over the previous year to $75 billion for the quarter.

In San Mateo, California, one of the earliest counties to impose pandemic activity regulations, it's been 50 days since businesses were forced to close, and only about two weeks occurred during the first quarter. Amazon issued guidance on net sales in the second quarter "to be between $75.0 billion and $81.0 billion, or to grow between 18% and 28%." With so much shopping shifting away from local commerce in Q2, my guess is that growth will be 26-32%.

In the press release, Amazon announced plans to reinvest nearly all of the profits back into the company on "corona-related expenses." This includes taking measures to provide safe working environments, conduct testing, increasing wages, investing in AWS, and hiring. These are good things to spend on - and it's what will allow Amazon to continue to thrive in the future.

By reinvesting all profits into covid-related expenses, Amazon is perceived much better than if they had taken profits - and strengthen themselves for the future. Most businesses don't have the sales to implement these measures, regardless of regulations and desire.

It is infinitely more positive than simply taking profits - and isn't entirely selfless. Amazon will continue to thrive in the near term, and thrive in the long run.

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