Amazon Business Growth Will Skyrocket in 2020 and Beyond
Amazon could potentially hit a valuation of $2 trillion by 2023
COVID-19 is shaping how the world is being run. With more than 1.6 million infected worldwide, many countries have gone into lockdown to help prevent the virus from spreading further.
This caused many economies across the world to spiral out of control as countries rush to stimulate it.
On top of this, many industries have been affected hard, including hospitality, travel, and retail. In New York alone, 75% of restaurants are closed, resulting from lockdowns.
While grocery stores and ‘essential’ stores are deemed to operate, everything else, including department store chains, are being forced to close. This has resorted to around 1 million retail workers being furloughed (this number will continue to rise) while 250, 000 stores are closed.
Traditional Retail is suffering, but Amazon Business is not, Amazon’s Growth will Skyrocket in 2020 and beyond!
As everyone is forced to turn to online shopping and grocery delivery, the increase in certain items has risen.
For obvious reasons, health sales have increased exponentially. Here is a summary of the statistics:
- Masks sales increased 590% from the week prior
- Hand sanitizer sales increased 420% from the week prior
- Clorox/Lysol wipes sales increased 184% from the week prior
- Disinfectants sales increased 178% from the week prior
- Gloves sales increased 151% from the week prior
As online shopping gains momentum, Amazon is in a ripe position to reap the rewards. Amazon already takes into account 40% of all US online retail sales, and this number will grow further.
Although the exact numbers of the recent growth aren’t known, the fact that the company has had to hire 100,000 new workers in the past few weeks alone signifies its tremendous growth.
“When this is over, I think this could be the biggest boon ever to Amazon,” — David Kahan, the US CEO of shoe brand Birkenstock
Perfect position with Whole Foods Stores and Amazon Fresh
Amazon has historically struggled with its grocery business, which made them acquire Whole Foods for 14 billion dollars.
As many are now purchasing groceries online, Amazon is once again in a prime (excuse the pun) position to benefit from this. By rolling out free delivery with Prime membership, Amazon’s back in 2019, doubled its delivery sales YOY (year on year).
With more subscribing to Amazon Prime, this signifies even more growth for Amazon’s grocery business.
It’s estimated by Second Measure that Amazon will have increased its delivery sales via Whole Foods by more than 400% during mid-March.
Better yet, a barrier to entry is getting people to download the Amazon app in the first place. Now that consumers are stuck at home, many are doing so, prompting these figures.
“Grocery stores are also doing good, but the difference is when this is over, the grocery stores go back to just being grocery stores. But if you didn’t have the Amazon app before, you do now.” — Kahan CEO of Birkenstock
Amazon Prime, Kindle and AWS Growth — Amazon’s Powercard, A Diversified Portfolio
Although the significant growth has been for Amazon’s retail business, it has many other parts of its business model that will benefit or at least not be as heavily impacted.
Amazon’s trump card for these uncertain times is its diversified portfolio.
Amazon Web Services (Cloud)
As more companies are being forced to go remote, this opens up more opportunities for cloud providers like AWS.
“Ultimately the trend towards cloud computing is not going to get dramatically slowed by a coronavirus,” David Heger, senior analyst at Edward Jones
Amazon Prime and Kindle
Everyone needs entertainment right now.
As many turn to providers like Netflix, Amazon is also in a position to reap subscriptions for their on-demand video service. Amazon has recently even offered kids’ movies and TV shows for free with just an Amazon account sign up.
This, of course, is a perfect opportunity for the tech giant to capture more business as this opens up an opportunity to convert to paid subscribers once all the free shows are used up (or if the parents get bored). This is especially useful as Amazon Prime is not only a video streaming service but also a full package with other benefits such as access to free delivery.
Kindle is also a product that will most likely see more uses and an increase in sales as people are locked indoors. Without the ability to browse bookstores, I would assume some growth with Kindle sales as well. Read more.