How Amazon.com turned the pandemic into its favour in 2020

Whether it was sales or stock price, the world’s largest e-commerce company managed to score a home run on all fronts this year as coronavirus-induced lockdown made people go online for everything from shopping to entertainment.

Business Desk, ETV Bharat:The year 2020 would be known in history as a pandemic year that disrupted economies and businesses worldwide to an unimaginable extent. But one of the very few outliers for whom the crisis turned into a full-blown opportunity was US-based multinational firm Amazon.com Inc.

The world’s largest e-commerce company, which is also growing rapidly in a broad range of other businesses like OTT services, cloud services, digital advertising, groceries, prescription drugs, etc, touched new heights this year as countries imposed lockdowns and people went online for everything from shopping to entertainment.

From record festive sales to highest market capitalization in the world, the company hit a lot of new milestones this year. Let’s take a quick glance at how the year 2020 panned out for Amazon under the leadership of its founder and CEO Jeff Bezos.

Market value

Amazon has managed to remain one of the world’s largest companies by market value throughout 2020. As of 14 December 2020, Amazon had a market cap of nearly $1.6 trillion and was the fourth most valued company in the world after Apple, Saudi Aramco and Microsoft.

The company’s stock price has rallied a whopping 80% in the last one year and 67% so far in 2020 to trade at around $3,170 per share.

Interestingly, Amazon held its initial public offering (IPO) on Nasdaq on 15 May 1997 at a price of $18 per share. Calculations show that $10,000 invested on that day would have turned into more than $12 million as of May 2020. That's more than 120,000% growth.

Record earnings

Amazon would release its December quarter numbers late in January next year. But as per the last set of numbers released officially, Amazon’s net income almost tripled, surging 196.7% to $6.3 billion, during the September quarter compared to the same period a year ago.

Revenue, which Amazon calls total net sales, rose 37.4% year-on-year to $96.1 billion during the same period.

Amazon’s revenue has surged 37% year-over-year to $96.1 billion in the third quarter. Its operating profits, meanwhile, rocketed 96% higher to $6.2 billion.

According to renowned tech investor Gene Munster, India could potentially contribute 15-20% to Amazon’s growth over the next five years, compared with just around 3% currently.

Rising popularity of Amazon Prime

Amazon Prime is Amazon’s subscription service that allows members to avail unlimited free and fast delivery on eligible items, exclusive access to deals, video streaming on Amazon’s OTT platform Prime Video, ad-free music, free in-game content, etc.

Amazon does not disclose how many Prime members it has by country. However, in January, it said it had more than 150 million Prime members globally.

According to Digital Commerce 360, Amazon had set a record this year during its 48-hour annual event Prime Day, with sales surpassing last year’s event by 45.2%.

The market research firm estimates that Amazon’s sales on Prime Day had hit $10.4 billion globally over the two-day period spanning 13-14 October, up from $7.16 billion during the 48-hour event in July 2019.

New businesses

Amazon has launched several customer-oriented services throughout the world. But the one that shows most promise is Amazon Pharmacy.

Amazon Pharmacy was launched in the US just last month in 45 states. In India, the company has launched its online pharmacy business in Bangalore.

Experts say that Amazon faces a healthcare industry that’s primed for disruption once the coronavirus passes. Also, Amazon’s prowess in logistics and its network of warehouses and drivers give it a clear edge in this space.

If Amazon manages to successfully deliver cheaper and more efficient services, the potential is enormous for fuelling its growth engine and stock price in future.