Amazon Foresees Sky High Holiday Sales And Investment In Delivery
By: Sneha Chaudhary
- Amazon Forecast a Jump In holiday revenue, customers tended to buy more during the pandemic.
- Consumers steadily turned Amazon for groceries, home care, and medical supplies.
On Thursday, Amazon.com Inc forecast a jump in holiday revenue-and Covid-19-related prices-as customers tended to buy more amid the pandemic online.
Company’s executive added that increased investment on distribution systems would persist for years, and after-hours trading shares fell 2 per cent.
The outbreak of the virus in the United States eight month ago. Consumers have steadily turned to Amazon for delivery of groceries, home appliances and medical supplies. In contrast, in the ended quarter, Amazon pushed to hire over 400,000 employees and earned $6.3 billion, a second straight record profit. Brick-and-mortar dealers closed their doors.
That has kept the largest online retailer in the world at the heart of workplace and political instability. This month, Democratic lawmakers accused Amazon of having “monopoly power” on its website over retailers, which the company denies. More than 19,000 of Amazon’s U.S. employees, contracted COVID-19, and some employees opposed site closures.
The response from Amazon currently involves an estimated $4 billion in costs associated with this holiday’s COVID-19, up from $2.5 billion last year. It checks workers for the virus and getting protective for new hires with safety clothing. Chief Financial Officer Brian Olsavsky said on a call with reporters that it is still operating less productively because of social distancing at its factories, which accounts for a significant part of its pandemic bill.
According to polling firm FactSet, Amazon predicted net profit to be between $1.0 billion and $4.5 billion, shy of $5.8 billion for analysts.
The competition this holiday continues to be fierce for the retail and cloud market. A typical bright point, Amazon Web Services ( AWS) cloud infrastructure division is competing with smaller competitor Microsoft Corp for businesses with great promise amid the pandemic, from online jobs to cloud-based games.
AWS revenues increased 29 per cent in the ended third quarter, while Microsoft posted a 48 per cent growth in revenue for its Azure cloud.
Still, to meet a milestone high, Amazon’s profits are shaping up. In a press conference, Jeff Bezos, Amazon’s Chief Executive and the world’s richest person said, “We see more shoppers shopping early for their holiday presents than ever, which is just one of the signs that this is going to be an unprecedented holiday season.”
CFO Olsavsky told reporters that the business is “not fully isolated” from the problems facing its sourcing partners this quarter, while the online retailer feels ready for the holiday season.
