Amazon is both the primary beneficiary - and the primary target - of public reaction to the pandemic. It's revenues are surging, it is hiring hundreds of thousands of new workers - but as many of its workforce sicken from the virus, the company's seeming indifference to worker safety, which may threaten customer safety, is causing it to rethink its strategy.
That Congress has demanded Bezos, alone of corporate executives, testify before it, despite the now well-reported culpability of meat packing and cruise line execs, among others, suggests that he and the company are perceived as an attractive bi-partisan target in an election year. And customers are beginning to complain about delivery delays, possibly rendering them less willing to rise to Amazon's defense. Sacrificing profits, as he has done before, may be worth the cost if it forestalls a mandatory Amazon breakup. JL
Cat Zakrzewski reports in the Washington Post:
The pandemic drove a 26% rise in first-quarter sales covering January through March as
worried shoppers increased their online spending. But profits declined 29%. The company might have
generated up to $4 billion in profit in the current quarter. But Bezos
said Amazon might spend the entirety of that – and perhaps more. The company wasn't prepared
for unprecedented demand for household staples or groceries. At the same time, the virus presents a new safety threat to
Amazon workers, and the company is facing a tide of worker activism
pushing for better protections.
Amazon is warning investors that it’s spending big to address the coronavirus pandemic.
“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon chief executive and Washington Post owner Jeff Bezos said in a statement.
The pandemic drove a 26 percent rise in first-quarter sales covering January through March as worried shoppers increased their online spending, my colleague Jay Greene reports. But profits for the online retailer declined 29 percent.
Normally, the company might have generated up to $4 billion in profit in the current quarter. But Bezos said Amazon might spend the entirety of that – and perhaps a bit more – to address issues caused by the pandemic. The e-tailer will use the money to hire more workers and ensure they’re outfitted with protective gear in working spaces like warehouses in which employees are working in close quarters. The company is also investing in developing its own coronavirus tests as its workers fall sick at warehouses around the world.
The coronavirus pandemic is testing every large tech company. But Amazon is uniquely exposed.
The company wasn't prepared for an unprecedented demand for many household staples or groceries as shoppers log onto the e-commerce giant rather than going to physical stores. At the same time, the virus presents a new safety threat to Amazon workers, and the company is facing a new tide of worker activism pushing for better protections.
“This large demand spike created major challenges in our operations network, and with our seller community and our suppliers,” Amazon finance chief Brian Olsavsky said during a call yesterday with financial analysts. “While we generally have experience getting ready for spikes in demand for known events, like the holiday season and Prime Day, we also generally spend months ramping up for these periods. The covid crisis allowed for no such preparation.”
Amazon is still struggling to meet a recent surge in demand for basic items.
It's still difficult to buy bleach or hand sanitizer on the service. And Amazon has had to suspend some regular services, such as one-day shipping to prime members. Olsavsky said the company didn't have projections past the next quarter about how long the new costs would last as uncertainty mounts about the virus.
Amazon has been hiring rapidly, adding another 95,000 employees since the end of the past quarter. At that time, the company had about 840,000 employees among its ranks globally, Jay reports.
The company focused much of its earnings report on the investments it’s making in worker safety.
The company rolled out the quarterly numbers as workers across the country are expected to strike to protest their working conditions for May Day, my colleague Rachel Lerman and Nitasha Tiku write. They're teaming up with other essential workers, including contractors at delivery services such as Target's Shipt and Instacart. They're calling for better cleaning services and hazard pay.
“This is a matter of life or death,” said Christian Smalls, a former Amazon worker who was fired from a Staten Island warehouse in March and who is helping organize the effort. “The virus is killing some of our employees.”
Reporters who were on the media call yesterday said Amazon refused to provide data about how many employees had tested positive for covid-19, or how many facilities have a confirmed case. From New York Times reporter Karen Weise:
Here are some of the investments in worker safety that Amazon highlighted:
— 150 “significant process changes” to help ensure its teams stay healthy
— 100 million face masks that are now required for workers
— 31,000 thermometers and more than 1,000 thermal cameras
— $300 million investment in testing in the current quarter
— $1 billion in testing over the course of this year if initial testing is successful
A message painted by activists on the street outside of one of the personal residences of Amazon founder Jeff Bezos. (Leah Millis/Reuters)
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