Amazon posted huge profits this year, even as it struggled to cope with the early days of the pandemic.
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To say the coronavirus had an impact on Amazon would be a massive understatement — the pandemic sparked a seismic shift in the role that the online retail giant plays in the lives of millions of Americans. Few companies benefited more from the lockdown measures that kept most of us at home — turning Amazon into a lifeline for basic needs like toilet paper and sanitary wipes, and indulgences like the latest sourdough kit and inflatable swimming pool, too.
Like most companies, Amazon was hit hard by the initial shock of the pandemic, which forced pretty much everyone into their homes in an effort to halt the spread of COVID-19. But after smoothing out early supply and pricing issues, the company began to reassert its dominance as consumers sought more online options for necessities like groceries. In the third quarter alone, it posted a profit of $6.3 billion — even after spending $2.5 billion on COVID-19 related costs, and without the usual Prime Day boost.
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Amazon was among a flurry of tech companies that actually consolidated their power during the pandemic, joined by players like videoconferencing leader Zoom, social networking giant Facebook and streaming services like Netflix and Google’s YouTube.
But it wasn’t all smooth sailing, and some of Amazon’s success has drawn the gaze of regulators who are worried that it may have gotten too powerful.
Here’s a look at how Amazon fared in 2020.
Coping with the early lockdown
The early days of the pandemic were marked by price gouging for items like face masks and hand sanitizer. Toilet paper was a hot item — the hallmark of a looming apocalypse. Amazon’s vaunted two-day shipping promise strained against huge demand, and when you’d actually get that package would shift from day to day.
Unlike many other companies that were forced to lay off employees, Amazon instead went on a hiring spree. After bringing on 175,000 workers in the first half, it committed to hiring another 100,000 to work in its warehouses. Keep in mind, the company brought 200,000 workers on board for the holiday season last year, so these kinds of big bursts are a semiregular phenomenon.
But Amazon felt the heat from its existing workers, some of whom were vocal about the lack of protections provided in the warehouse: In April, 300 employees staged a protest across 50 facilities. The controversy boiled over when the retail giant fired several warehouse employees who spoke out about its working conditions.
Amazon said the fired employees violated its conduct guidelines, adding that while it respects workers’ rights, it hasn’t offered “blanket immunity against any and all internal policies.” In a May shareholder meeting, CEO Jeff Bezos defended the firings, and said the company didn’t terminate anyone for talking about working conditions.
Still, Amazon turned around and poured billions of dollars into personal protective equipment and other costs related to improving the safety of its employees, even as it disclosed in October that nearly 20,000 US employees had contracted COVID-19. The company said it would pay $500 million in bonuses to workers most exposed to the pandemic.
A new Prime Day
Even as Amazon cut down on shipping delays, it pushed back Prime Day, the multiday shopping phenomenon, from its usual summer perch to October. The company likely realized that a big sales push would’ve fallen flat in the midst of massive unemployment as the economy struggled to get back on track. In its place was a lower-key, fashion-related sales event.
The unusual timing for this year’s Prime Day — just weeks ahead of the critical Black Friday shopping stretch and simultaneous with Apple’s iPhone event — likely meant Amazon saw less interest than in years past. In its postevent statement, Amazon failed to talk about overall sales, instead focusing on the success of its independent sellers.
Prime Day kicked off what’s essentially been a “cybermonth” of sales. Even if Prime Day couldn’t match the heights of previous years, it was enough to motivate traditional retailers such as Walmart and Best Buy to introduce their own sales too. The promotions stretched for weeks through the Thanksgiving holiday break.
The hardware blitz
The coronavirus didn’t slow down Amazon’s penchant for unveiling a load of new products, including updates to its Echo, Echo Show and Echo Dot smart speakers (alongside kid-friendly variants), its Eero mesh Wi-Fi router and Ring car cam. But the most off-the-wall product was the Ring Always Home Cam, an indoor camera drone that flies around as a sort of security guard for your house.
Then there’s Amazon Luna, a gaming service for $6 a month that runs on Amazon Web Services and will be accessible via PCs, Fire TVs and even iOS. The service takes on Google’s Stadia and the cloud-gaming services from Microsoft and Sony.
Amazon also unveiled a $50 controller to pair with the service, which looks like a stock Xbox controller.
Power and scrutiny
With fewer consumers willing to walk into physical stores, more people leaned on internet services like Amazon. For critical things like groceries, Amazon had its Whole Foods chain.
The result: massive profits throughout the year. Amazon has posted $14.11 billion in profit and $260.51 billion in revenue this year to date. Remember that these results come on top of spending billions of dollars on COVID-19-related expenses.
That power has drawn the scrutiny of Washington, and Bezos was among the executives called before Congress to testify during a hearing that questioned whether Big Tech is getting too powerful. Lawmakers looked specifically at whether Amazon was using its power to harm or unfairly push out smaller third-party sellers. The European Union likewise hit Amazon with antitrust charges, alleging the company uses data about the merchants on its platform against them.
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That’s one of the reasons Amazon played up the success of the independent sellers on its site, in the aftermath of Prime Day and the Black Friday and Cyber Monday stretch.
Though Amazon has denied any wrongdoing, increased regulatory scrutiny will be a big reality for the company — and for the tech world in general — even as we keep ordering everything from holiday gifts to diapers.
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