Another strong quarter expected for Amazon amid the pandemic
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Amazon reports its second-quarter earnings Thursday after the market closes. The first quarter was a strong one for the e-commerce, streaming video and cloud-services tech behemoth. And Amazon’s business likely strengthened in the spring, with the COVID-19 pandemic shuttering a lot of brick-and-mortar businesses, and keeping a lot of people sheltering in place and ordering stuff from home.
Amazon is closing in on 40% of the U.S. e-commerce market. And with Americans hunkered down, Amazon’s interlocking internet businesses are firing on all cylinders, said equity analyst Tuna Amobi at CFRA Research.
“Streaming video, e-commerce, as well as cloud computing — learning and remote workforce — really helped Amazon tremendously to consolidate its gains,” Amobi said.
Amobi predicts strong revenue and profit growth — even though Amazon has burned through several billion dollars hiring new workers, beefing up employee PPE and testing for COVID-19.
But Amazon will face a challenge holding on to new customers, said Nick Shields, an analyst at Third Bridge. He pointed to the company’s grocery delivery business, Amazon Fresh.
“I’m curious to see if those are just one-time buyers, and they went back to buying their groceries the traditional way — just going to a brick-and-mortar store — or if these are longer-term Amazon Fresh customers,” Shields said.
Shields points out that Amazon does have giant, deep-pocketed, tech-savvy competitors for online shoppers, including Walmart.
Competition was also on the minds of legislators, when Amazon CEO Jeff Bezos and other tech execs testified before a congressional antitrust hearing Wednesday.
Dan Crane at the University of Michigan Law School said the issue boils down to whether consumers have real choices, or face a monopoly.
“When we ask who are Amazon’s competitors, if we’re just thinking of Amazon as a retailer, there are lots of those out there,” Crane said. “But when we think about Amazon as an e-commerce platform, there may not be that many out there that really can do what Amazon does today.”
One important question, according to Crane: How much control does the company exert over third-party sellers, who may have to please Amazon to stay in business?
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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