Amazon has said that complete COVID-19 lockdown in India since March 24 due to which the ecommerce giant was allowed to sell only groceries and other essential items has resulted in the biggest revenue impact in any country in the international market.
The Indian government has directed the ecommerce platforms to sell only essential goods during the lockdown period that is on till May 3, while it has allowed the opening of standalone retail shops in a bid to ease lockdown restrictions.
This came as Amazon reported its results for the first three months of the year, where it said sales soared as more home-bound people shopped online amid the coronavirus pandemic.
But getting millions of packages to shopper's doorsteps is expensive. The rising costs pushed Amazon's first-quarter profit down 29% and its earnings missed Wall Street expectations. Amazon shares slipped about 5% in after-hours trading Thursday.
And CEO and founder Jeff Bezos says Amazon will spend more.
Speaking to analysts over an earnings call on Thursday, Amazon chief financial officer Brian Olsavsky said that the demand of the revenue side has been severely impacted in India when compared to other shelter-in-place geographies across the world.
"I think the biggest impact internationally has been in India, where of course, similar to other companies in India, we're now only fulfilling our essential goods such as grocery," said Olsavsky.
"So that's cut back a lot on our offering, and we will further expand when the Indian government announces that were allowed to resume operations. So we're in a bit of a holding pattern except for grocery in India," he added.
With the government allowing the opening of standalone retail shops in a bid to ease lockdown restrictions, Amazon has urged the authorities to also let it sell non-essential items so that millions of consumers at home can be benefitted.
According to an Amazon India spokesperson, e-commerce offers the safest way for sellers and retailers to serve the needs of citizens while ensuring social distancing.
"We are committed to keep citizens safe and urge the government to enable e-commerce to play its role in the joint fight against the pandemic by allowing the supply of all goods that people need over a prolonged period," the company spokesperson said late last month.
Amazon's sales soared in the first three months of the year, as more home-bound people shopped online amid the coronavirus pandemic.
But getting millions of packages to shopper's doorsteps is expensive. The rising costs pushed Amazon's first-quarter profit down 29% and its earnings missed Wall Street expectations. Amazon shares slipped about 5% in after-hours trading Thursday.
And CEO and founder Jeff Bezos says Amazon will spend more.
Bezos said he expects the company to spend 4 billion and perhaps a bit more in the second quarter. That money will go to pay workers overtime, to buy masks or other safety protection for them and to disinfect Amazon's vast warehouses where orders are packed and shipped.
Still, the company is in better financial position than most traditional retailers. Macy's, Kohl's and Gap temporarily closed their stores, losing much of their sales. They have also stopped paying their workers.
Amazon, whose reputation is built on speedy deliveries, has struggled to keep up with the surge in orders. Deliveries that took two days or less can now take a week or longer. And it is sold out of many the products people need, like toilet paper and disinfectant sprays.
The problem, Amazon said, is that it can't get products into its warehouses and out again fast enough. The company doesn't know when delivery times will return to normal.
Right now, things are still so up in the air that I can't really project when that day will be, said Brian Olsavsky, Amazon's chief financial officer.
It has hired 175,000 people to try to keep up with the rush of orders and is paying workers an extra 2 an hour. But many have stayed home, worried they may contract the virus at the warehouse where thousands of people work. Some have protested what they said were unsafe conditions.
In France, a court closed all six Amazon warehouses, saying that the company didn't do enough to protect workers. Amazon has said it provides workers with face masks, has been checking temperatures and keeps workers apart.
Overall, the Seattle-based company reported net income of 2.54 billion in the first quarter, compared with 3.56 billion a year ago. Earnings per share came to 5.01, below the 6.23 analysts expected, according to FactSet.
Revenue rose 26% to 75.45 billion, beating the 73.7 billion analysts expected.
Outside of online shopping, Amazon's other businesses also grew. Revenue at its cloud computing business, which helps powers video streaming site Netflix and other companies, rose 33%.
At Whole Foods, revenue rose 8%. Amazon said much of the sales increase happened in March, when shoppers headed to Whole Foods to stock up on groceries due to the pandemic.
Its total workforce topped 840,000 at the end of March, adding more than 42,000 employees since the end of last year. Amazon.com Inc. is the second-largest U.S.-based employer behind Walmart.
With PTI inputs