Under the home order, millions of Americans turn to marketplaces like Amazon to order essential goods like toilet paper, food, handwash, flu medication. Instead of going to the supermarket, consumers depend on delivery services such as Amazon Fresh, resulting in slower delivery times and more items "evaporating" from shelves due to excessive demand. Amazon also employs more than 100,000 delivery and warehouse workers from March 2020 to meet demand, not to mention plans to employ another 75,000 people.

Unprecedented demand has pushed Amazon shares to new heights. The share price hit an all-time high on April 16 and has risen 28% this year, going against the trend as the S&P 500 index fell 11%. Investors have been optimistic about Amazon as well as other home services such as Netflix and Zoom over the past few months.

The outlook for Amazon is brightening, despite the retail industry in particular and the economy, in general, is entering a period of financial turmoil. Other stores had to close and lay off thousands of employees. Small or non-essential businesses are also closed and hope to be able to operate before reopening.

Consumer spending fell sharply as retail sales fell a record of 8.7% in March. Many restrict shopping only to necessities, while others are cautious about all purchases when they are among the 22 million Americans applying for unemployment assistance in the past four weeks.

55% of Americans order groceries online and 60% use one of Amazon's services, according to a survey by RBC Capital Markets.

Retailers that close continue to sell online don't mean soaring sales like Amazon. CommerNext's survey of nearly 100 such stores showed that 64.5% of businesses said e-commerce activity also decreased during the epidemic.

Taken together, the troubles of the retail industry raised concerns about what the competitive picture would look like as the epidemic remission. Besides Walmart, Target, Costco, who else can compete with Amazon?

The answer is yes. According to Andrew Lipsman, chief analyst at eMarketer, major retailers that don't sell items like clothing and furniture will be able to weather the storm along with many brands that sell directly to users. Instead of "flattening" the entire retail market, the epidemic tends to accelerate the downturn of "dull" retailers.

Victory and Failure

For the time being, Amazon has clearly benefited from the blockade caused by the epidemic. Amazon - which is America's largest privately-owned company - has offered to recruit retail workers who have lost their jobs because of the health crisis. In a letter to shareholders, CEO Jeff Bezos said the company welcomed people from other industries, including engineers and preschool teachers.

But this is also the time when Amazon faces many allegations and objections from the former workforce itself. Across the country, groups of delivery workers, warehouses, and market-goers for Prime Now, Whole Foods employees accuse Amazon of not doing enough to protect them. Some complained about austerity working conditions before the epidemic appeared.

Amazon also makes millions of customers disgruntled when deciding to prioritize essential goods such as household items, medical items. Some sellers have to reduce prices sharply, while others have to cut staff. People who depend on the Fulfillment by Amazon (FBA) service to reach customers are severely affected because the service is intended for essential items. The FBA allows sellers to deliver goods to Amazon warehouses, then Amazon employees deliver goods to customers and eat commissions.

According to Stacy Mitchell, co-Director of the Local Self-Reliance Institute, Amazon's decision deepens the problem of a single company wielding too much power in the consumer goods market. Amazon countered the idea that it possessed "outsized" power in the retail industry because it was competing globally, both online and in person. The company insists it represents less than 1% of world retail sales and less than 4% in the US.

It is unclear whether the epidemic will have a lasting impact on American shopping habits. A recent survey by RBC Capital Markets found that 55% of Americans ordered groceries online and 60% used one of Amazon's services.

Source: BizLive