Business

Can Amazon repeat an eye-popping year of growth?

The smartest insight and analysis, from all perspectives, rounded up from around the web:

Amazon’s pandemic-fueled boom shows no sign of slowing, said Dan Gallagher at The Wall Street Journal. With the pandemic easing, a short-term question has been “whether online shoppers would curb their clicks” and return to brick-and-mortar stores after a year of panic-buying “everything from toilet paper to office supplies” through Amazon. The answer so far is “a resounding no.” Amazon’s revenue jumped 44 percent year over year in the past three months, to $108 billion, and its “e-commerce related business — consisting of online stores, third-party, and subscription segments” — grew at an even faster clip, 49 percent. Despite aggressive investment, adding roughly 400,000 workers, about the total number of employees at Home Depot, the company’s profits tripled to $8.1 billion.

Investors are numb to eye-popping Big Tech earnings these days, said Daniel Newman at MarketWatch, but Amazon “seems to be getting it right on all fronts.” Its e-commerce and cloud-computing services “get all the glory,” but innovations such as the autonomous delivery robot Scout, and investments in the high-growth pharmacy space, form “unheralded parts of the long-term growth strategy.” Even Amazon Studios — seemingly an unlikely source of invention — received 12 Academy Award nominations. Amazon’s revenue from digital advertising sales also rose 77 percent, said Julia Horowitz at CNN, and it now controls more than 10 percent of the digital ad market. Advertisers are following consumers who shop online, and more U.S. consumers use Amazon than anyplace else. One strategist called Amazon an “almost perfect business for the world right now.”

A decade ago, people lamented the “Walmart-ization” of America and the accretion of big-box retailers, said Robert Scott at The Hill. The current “Amazon economy” poses an even greater threat to Main Street. Even as 1 in 6 small businesses closed their doors because of the pandemic, Amazon’s size and power grew. It has destroyed retailers that employed millions of workers while “importing an endless stream of China’s mass-produced goods.” When Amazon raised wages for more than 500,000 employees by 50 cents to $3 an hour, said The Economist, smaller firms followed suit. That might sound good for workers, but the “spillover” effect is a double-edged sword. The outsize influence of Amazon suggests that “labor markets are not working as they should,” and ­Amazon’s power won’t always work in wage earners’ favor.

“Amazon’s 2020 performance was extraordinary,” but remember that it also took place under unique conditions, said Tae Kim at Bloomberg. The trends driving commerce online “will likely lose some steam as life returns to normal.” Meanwhile, “governments around the world have been investigating the company’s anti-competitive behavior.” Investors recognize this; that’s why Amazon’s share price has not kept up with the market. Founder Jeff Bezos’ successor, Andy Jassy, will be taking over just as ­”Amazon loses the halo effect of the pandemic,” said Gina Chon at Breaking Views. It’s a good sign for Amazon that its “growth increasingly comes from things other than e-commerce.” As the economy normalizes, shepherding the expansion of Amazon’s other businesses will be an even more important job.

Source:

theweek.com

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