Amazon announced on Thursday that the company is expecting a surge in holiday sales and costs related to the pandemic, thanks to the consumers who are doing more online shopping online during the pandemic. The company will keep spending more on delivery infrastructures and it can continue over one year. After the announcement, the company shares went down by 2% in after-hours trading.
Since the virus spread in the U.S., consumers using amazon more for delivery of groceries, home goods and medical supplies because of the shop closures. Amazon hired 400,00 workers to meet the demand and made $6.3 billion in the third quarter ended on September 30, 2020. The strategy kept the world’s largest online retailer at the centre of workplace and political ruckus. Meanwhile, more than 19,000 of Amazon’s U.S. employees got infected with Coronavirus and the company had to close some sites.
Amazon COVID-19 cost-related expenses increased from $2.5 billion to $4 billion from the last quarter. The expenses are related to testing employees for the virus and providing more protective gears to employees. Moreover, social distancing practice is the main reason behind expense increase, because it decreases productivity.
The cloud computing division Amazon Web Services (AWS) is doing well. AWS sales grew 29% as compared to Microsoft Azure cloud service which sales increased 48% during the last reported quarter.
Amazon CEO Jeff Bezos said that more and more consumers are shopping online, early for their holiday gifts and it will be an extraordinary holiday season.
Some analyst raises questions about the company’s ability to handle the increasing number of customers. It happened before in 2013 when people were unable to receive the deliverieson time during the holiday. Amazon moved its prime day from July to October, giving more time to customers to place holiday orders and making sure that people get delivery of their orders on time.
said that they are expecting a 50% increase in orders this holiday seasons and
they are ready to deliver the orders by expanding their transport capabilities.
Amazon is expecting first-ever $100 billion of net sales and target $112 billion
of net sales in the fourth quarter, throwing all the estimates out of the