Amazon.com Inc on Thursday 30 July 2020 reported the Biggest ever profit in its 26-year history as the online sales and its lucrative business supporting third party merchants surged during the corona virus pandemic. Amazon had a forecast that it might lose money in the just-ended second quarter (April-June) because it expected to spend some $4 billion on protective equipment for staff, and other expenses related to Covid-19 but still it has earned $5.2 billion- double its net income compared to the previous year’s income.
While rival brick and mortar retailers and traditional market sellers have had to shut store during government-imposed lockdowns, Amazon hired 175000 people in recent months, and saw demand for its services in a higher way. The company also said its revenue jumped 40% from a year earlier to $88.9 billion.
The founder of the company, and the World’s richest person, Jeff Bezos reported that this was an highly unusual quarter for the company. The shares of the company have risen by more than 60% this year adding to the wealth of its founder Jeff Bezos who is the biggest stockholder of the company.
Online sales jumped 48% to $45.9 billion in the second quarter. Meanwhile, merchants paid Amazon more to fulfill and sponsor their products in order to reach the Company’s loyal customer database. This resulted in a 52% and 41% jump in seller services revenue and other revenues such as from the advertisements, respectively. Amazon’s cloud services also saw higher demands as companies switched to virtual offices during the covid-19 pandemic. The Revenue from Amazon Web Services (AWS), which sells Data Storage and computing power in the cloud, rose nearly 29% to $10.81 billion.
Amazon’s Chief officer of finance, Brian Olsavsky told reporters that the massive profits surprised the organization because at the time, it issued its forecast in the last quarter, shoppers were buying the only lower-margin products from the company. Online grocery sales has been tripled year over year and the worldwide streaming of the video hours has been doubled, Delivery and video services bundled with the company’s loyalty club prime are a key reason why customers subscribe to that program and do more of their shopping through Amazon.
Olsavsky, also said that the Prime day, the company’s lucrative summer marketing blitz, would be pushed back to the fourth quarter, excluding its business in India. He also said that per usual the current quarter would see higher costs as the company gears up for the holiday season even more decided now due to higher-than-usual sales.