Amazon doubled its profits last quarter thanks to COVID-related demand
Online grocery sales nearly tripled as well.
Amazon is one of a few companies to have benefited from the pandemic, thanks to a massive uptick in online sales in the past few months. Today, that was made even clearer thanks to the company’s blockbuster Q2 earnings release, with a reported net income of $5.2 billion. That’s double the amount of money it made this time last year (which was $2.6 billion). Net sales also increased 40 percent to $88.9 billion this quarter.
Also of note is that Amazon has responded to the sudden increase in grocery delivery demand by increasing its capacity by over 160 percent. It has also supposedly tripled grocery pickup locations. This is in large part due to the enormous uptick in online grocery sales -- Amazon says it is triple the amount from the same period last year.
Last quarter, Amazon saw a big uptick in sales as well, but overall profits were slightly dampened due to the $4 billion in COVID-related expenses. The fact that net income for Q2 was so high despite the increase in expenses shows just how much consumers used Amazon in the past few months. During the call, Amazon’s Brian Hall attributed much of this success to Prime members. He said that Prime members shop more often, and with larger basket sizes. They also make up a heavy component of the aforementioned online grocery sales. Prime Video viewership went up because of them as well — nearly double year-over-year.
“This was another highly unusual quarter,” said Jeff Bezos, Amazon founder and CEO. “We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales.”
The last point is a nod towards Bezos’s recent testimony in the House Judiciary Committee yesterday, where he had to defend the company against antitrust accusations. Even though Bezos said that selling on Amazon is beneficial for third-party sellers, he couldn’t reassure the committee that the company hadn’t misused data from them in order to sell Amazon-branded products. When confronted with a Wall Street Journal report on the matter, Bezos said that he “can’t guarantee” that the policy that prohibits employees from using seller-specific data hadn’t been violated.
The company has also faced several accusations that it hasn’t prioritized the safety of its warehouse workers, which have allegedly led to COVID-related deaths. In response, Amazon said in the earnings release that it is planning on spending more money to ensure the safety of its employees, such as increased social distancing and new medical facilities. The company said it would spend $2 billion in COVID-related expenses in Q3. Amazon says that’s lower than what it spent in Q2 due to better cost efficiency.
