No Limits to Growth: How Amazon is capitalising on the COVID-19 pandemic

April 27, 2020

2 min read

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What's going on here?

For most companies, COVID-19 represents the greatest threat they will ever have to endure. For a minute few, it is a golden opportunity. One such company is Amazon, which is capitalising on the crisis to expand their business operations.

What does this mean?

Amazon is continuing its global delivery services during the pandemic which, according to the Financial Times, makes it an “extension of the emergency services”. Jeff Bezos, Amazon’s founder, has prioritised the delivery of essential items (such as medicine) with all other products subject to delayed delivery. To withstand the surge in demand, Amazon will likely hire an additional 100,000 workers across Europe and North America and increase its hourly wages in the USA from $15 to $17 an hour.

Even with more staff, Amazon is still facing myriad logistical and operational issues. Prime Pantry (Amazon’s grocery arm), for example, has halted its operations due to stock shortages. There are further issues in managing demand, with some medicinal products having increased in price by 2000%.

What's the big picture effect?

Even with a disruption to Amazon’s business, COVID-19 has attracted a new customer base for Amazon. Analysts assert that people who previously did not use this e-commerce platform; in particular, the older demographic have adapted to this way of purchasing essentials. A consumer behaviour study conducted found that 34% of participants have begun spending more on Amazon since the outbreak began. The profits that follow justify the expense of additional employees.

Furthermore, the onset of COVID-19 may result in Amazon expanding its offering in the healthcare sector. Amazon made its first move in this sector in 2018 when it acquired PillPack (an online pharmacy). Amazon Care (usually only for Amazon’s staff) is currently collaborating with a Gates Foundation to assist in delivering COVID-19 test kits.

Despite widespread concern about Amazon’s market share, it continues to strengthen. In the USA and UK respectively, Amazon boasts approximately a 38.7% and 30.1% market share on e-commerce sales respectively. These statistics potentially disguise their true control, given that they collect vast amounts of data, which is not recorded in standard market metrics. 

Overall, even with slight disruptions, Amazon is flourishing in unprecedented market conditions. The last word ought however to go to its staff. Amazon has been roundly criticised for not providing its employees with protective equipment and implementing adequate safety protocols. Ultimately, employee welfare will become a critical consideration for Amazon, because it cannot hope to continue to grow without a healthy staff.

Report written by Marselia Ong

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