With 250,000 stores closed down in the US, Amazon is clearly reaping the benefits. The spread of COVID-19 has sent the global economy into a downturn. The retail industry is hit hard along with the hospitality and travel industries. Groceries and e-commerce sites continue to operate as essential needs, retail stores, on the other hand, are categorized as non-essential. Hence, they are forced to close their doors due to strict quarantines and lockdowns. Foot traffic in non-essential stores went into a nosedive by 97% in the last two weeks of March.
The closure of many retail businesses has prompted a shift in consumer behavior. Market experts foresee that 15,000 more retail stores may be closed for good within the year. Thus, amounting to a 60% increase from the previous year. While many businesses have been negatively impacted by the pandemic. However, Amazon is not one of them. In fact, their sales are already booming and continue to grow.
Amazon’s Sales are Soaring
In April, Amazon reported its sales for the first quarter of 2020 with a whopping $75.5 billion in revenue and $5.01 per share. Meanwhile, sales in North America went up by 29% while international sales increased by 18%. While Amazon’s revenue may be higher, their profits are actually lower.
According to Amazon’s CEO Jeff Bezos, the company expects to make $4 billion or more in profit. However, due to the COVID-19 pandemic, Amazon will spend that entire amount on making sure that their employees are safe and that the products they deliver will get to their customers. Their company will continue to invest in COVID-19 related needs such as personal protective equipment (PPEs), ensuring that their facilities are clean, an increase in wages for hourly staff, and putting up systems to implement social distancing guidelines. Bezos also explained that they are planning to spend around $300 million in developing Amazon’s own COVID-19 testing capabilities. With the uncertainty of the future, their company is investing heavily in the safety of its employees, said Bezos. In response to the pandemic, Amazon is announcing that instead of just making a profit they are spending it. On the other hand, reports say that investors are not too happy with the news. Hence, the stocks are down.
Amazon also said that they purchased 100 million face masks for their employees and are requiring everyone to wear one. They also bought 31,000 thermometers and 1,000 thermal cameras to be used for mandatory temperature checks for their staff throughout their sites. This includes Whole Foods Market stores which will also offer masks to their customers.
Amazon Web Services Reached Billions In the first quarter, Amazon Web Services reportedly reached $10 billion even though the growth went down particularly in the hospitality and travel sector. Nonetheless, it remains to be the market leader in the cloud computing industry. This segment accounts for 77% of the company’s total operating income. Subscriptions and Advertising are Up The company spent a billion dollars on one-day shipping in just the first quarter. However, they had some challenges including delays in delivery by four days or more. They are working on moving their inventory closer to the cities as well as building a more efficient network. Amazon Prime, a membership program offers their subscribers a free one-day or same-day delivery. Members can also access TV, movie, and music streaming. Prime members are maximizing these benefits at this particular time when everyone is forced to stay at home. In fact, they are buying more now. Hence, Amazon’s subscription services are up by 28%. Amazon Prime has around 150 million subscribers. Meanwhile, Prime Video also launched a Prime Video Cinema, a premium movie rental in the US, UK, and Germany where customers can stream in-theater movies at the comfort of their home. The company’s other category includes the advertising business which was also up by 44%. Amazon understands its customer. They know what they want and don’t want to purchase. Hence, they are using this information in their advertising business. A huge part of their advertising business is related to the sales of Amazon. Their advertising segment may be efficient and valuable. Amazon’s Forecast Experts have already predicted the growth of Amazon’s sales as many stores started to close down when the pandemic started to spread. Many consumers shifted to Amazon for their essential and non-essential needs. Market analysts are not surprised by this, especially with the shift in consumer behavior. The new trend will remain favorable for Amazon. This pandemic will likely result in behavioral patterns that will benefit Amazon in the long run as well as e-commerce, digital advertising, and cloud computing. Meanwhile, Amazon projects that their sales will grow between 18% to 28% in the second quarter. Even if the company has already enjoyed a stable profit in the past couple of years, its operating income is projected to go down. The loss is associated with COVID-19 related expenses.
Amazon is Relevant More than Ever
Amazon is hiring around 250,000 workers to be able to serve the increasing customer demand. More and more people are changing their old habits and patronizing online shopping, delivery services, and pickup. Market analysts say that this behavior will likely stick even when the pandemic is over.
Amazon’s sales account for almost 40% of online retail sales in the US alone. They are way ahead of their next competitor. Prior to the spread of coronavirus, the e-commerce industry accounts for 10% to 15% in retail. However, with the current situation, it will likely grow.
With millions of people stuck at home, Amazon has now become more than just an option. It has become one of the main channels for shopping for essentials. Consumers are spending more on Amazon by 35% compared to the same period last year.
Challenges Faced by Retailers In North America, the fashion and beauty industry accounts for $600 billion in revenue yearly. They have around 300,000 workers. Some of the companies say they do not know when their stores will reopen while experts believe that some may never reopen.
Retail businesses are facing a number of difficult challenges. This includes the possibility of laying off employees, closure of stores, and closure of business among many others. How to Make Money on Amazon Amazon is the biggest online retailer with an estimate of 120 million products available in the marketplace. This means that there are plenty of opportunities for people to earn some money. The good news is, you don’t even need to have a product to receive an income.
Here are some of the ways you can make money from Amazon. Publish an e-book. One of the ways to earn on Amazon is to publish your own e-book. Each time you sell an e-book, Amazon will take between 35% to 70% of the listing price.
Since Amazon is a self-publishing site, anyone can write their own e-book without having to be a published writer. Many e-books are under 100 pages and have varying levels of quality. If you have knowledge of a certain subject or know how to write creatively.
You’ll have to promote your e-book and get the word out. Another option to get you started is by using Kindle Direct Publishing. Publishing your work takes less than five minutes and your e-book will be available on Kindle in 24 to 48 hours.
When it comes to pricing, you can set your own rates for self-published books in Amazon. Meanwhile, you can earn up to 70% of your e-book’s royalties on Kindle. If you want to publish copies of your e-book physically, you can use CreateSpace. Another option is to use ACX if you want to create an audiobook that you can also sell on Amazon.
Sell products using FBA. Become a seller on Amazon, buy wholesale products from other platforms, send your inventory to Amazon’s fulfillment center. Through FBA (Fulfillment by Amazon), Amazon will deliver your products to the customers to simplify the process. On the other hand, you can opt to ship your products by yourself if you don’t want to pay for additional fees.
You can earn income from selling products on Amazon for a higher price than what you originally paid for.
Become an Amazon Affiliate. If you want to earn passive income, consider becoming an Amazon affiliate. You can join Amazon Associates program where you can earn money without having to sell a product. Through your website or blog, you can earn commission by placing affiliate links on your site that will be directed to Amazon products.
Your site will generate revenue by promoting Amazon products aligned with the theme of your website or blog. When someone clicks on the affiliate link on your website, you can earn between 6% to 10% for every sale depending on the category. However, the commissions are low which is why you need lots of traffic on your site. The more traffic goes to your site, the higher the chances you’ll get some clicks and the bigger chances for you to make money.
The commission rate is as follows:
10% - Beauty, luxury, Amazon coins 8% - Home, furniture, home improvement, garden, pet products 6% - Outdoor, tools 5% - Music, digital videos, groceries
Be an Amazon representative. You can work for Amazon from your home by becoming an Amazon representative. Many of the employees of Amazon work remotely from home.The company’s customer service department is spread out in over 130 areas all over the world in 16 languages.
You can become a virtual company representative part-time or full-time if you meet the qualifications. Check Amazon’s website for an updated list of job opportunities.
Sell products under Amazon’s private brands. Through Amazon Accelerator program, manufacturers can create their own brands. You can sell it exclusively on Amazon as a private supplier.
Amazon will provide you with useful tools so that you can create your own brand. You can maximize Amazon’s resources so that you are aware of which kind of products will perform well. Amazon can also conduct product testing and generate customer feedback to help you improve your product.
Deliver using Amazon Flex. Amazon operates its own delivery service. With its same-day delivery service, the company needs extra help in delivering packages in different areas.
If you want to earn extra income, you can become a driver through Amazon Flex. If you have a smartphone and a car, you can deliver goods through Amazon Prime.
Drivers can earn a salary between $18 to $25 per hour. You can track your profit through Amazon Flex mobile app. This job allows you to be flexible so you can create your own schedule based on your availability.
Sell your services. Not many are aware but Amazon is not just a site for selling physical items. You can also offer professional services via Amazon Services.
You don’t need to pay any costs or monthly fees to join. However, a portion of your income will go to Amazon once you’ve completed a job. The amount depends on the type of category you are offering.
Some of the most popular categories include business, consumer electronics, events, health, beauty, apparel, jewelry, and home among many others. If you would like to offer services not indicated in the categories, you may apply online.
Final Thoughts People are using Amazon for many reasons. Whether its buying/selling a product or researching product reviews, more and more people are checking out Amazon. With the spread of the coronavirus, many consumers are turning to online shopping to fulfill their essential and non-essential needs. Reports show a boost in the sales of Amazon and marketers predict that the company will continue to enjoy the profits in the coming months. If you want to take a slice of Amazon’s earnings, follow some of the steps we mentioned above on how you can use the website to earn income. E-commerce will continue to play a critical role in the economy in the years to come.