Amazon is and was the largest company in terms of valuation before and currently/after the Covid-19 pandemic. Amazon is well known for its fast delivery times and vast stock of many household and personal items. They even sell fresh food and vegetables(fresh is debatable and not for this dissertation) so they already are in a very favourable position coming into this pandemic. However this is controversial as many people even the DOJ(department of justice in the US) are thinking it’s too big. So Amazon being already influential it begs the question that in the title of the dissertation as many companies have lost out but Amazon isn’t slowing down but speeding up.
Amazon is internationally recognised as a massive company and what they do. However people forget that they own other companies like AWS(amazon web services) they also own Whole Foods a grocery store, they also have prime video which is competing with Netflix. So Amazon is renowned for being an online store but also it shows us that there is more to the giant than most people can actually see as most people don’t interact with AWS that much so they don’t realise Amazon’s power the same can be said about Amazon’s ownership of Whole Foods as Amazon, “has been deluged with food orders”. This quote shows us that even though they are new to foods only from 2017 they can still dominate the market. So this would show that Amazon can dominate markets when they enter it. This unfair(some would say) advantage makes Amazon in a prime position for any crisis.
Then when the pandemic hit Amazon used its size and power to do multitudes of different tactics which allowed it to stay in business and continuously provide its services including but not limited to increasing staff numbers by 175,000 members1 as well as $4 billion on covid safety measures which shows that Amazon’s already helped it secure more and more to help it going which again shows the necessity of the question. After this we can see how Amazon has grown its influence over the pandemic whilst many other businesses are going out of business.
After all this it shows that Amazon’s influence over the pandemic has been either due to its own decisions or the way it’s been positioned both come down to the fact that Amazon is built for today’s society being very technologically able. Amazon quite ironically helped build indirectly with AWS which hosts such things as Netflix and Zoom.
The start of the pandemic was a shock to us all but for some it was an opportunity to take advantage of which Amazon did spectacularly. Amazon already being a key part of our lives either through prime, the amazon echo and other such technology so Amazon was already placed in such a good position which they exploited massively by employing more than 8000 staff in the UK alone. So naturally, Amazon was already in a good place which then allowed them to start becoming more dominant as more and more shops closed and them still being allowed to continue operations which also allowed them to continually increase their influence. However this does bring many risks to consumers and to staff.
Amazon can continually push itself to do better because of what it has done and accelerated before and during the pandemic. This was automation with robots doing the majority of the work with a few human workers.3 This along with new developments such as drone delivery and checkoutless stores allows Amazon to continue working at very high efficiency however there comes risks and there are some notable ones. These include back and other injuries resulting from workplace accidents this may have been written a couple years before the pandemic but it is still very relevant as Amazon is investing more and more into robotics as they are looking for more advanced robots, in their annual robotics challenge, which will help them be exponentially more efficient and the pandemic has widened their aspirations for the level of robot technology. So Amazon is investing more heavily into robotics and other technology ventures over the pandemic including an autonomous-car developer. This means that Amazon is using autonomous and robotic equipment much more so they are more efficient so they outcompete the competition thus increasing their own influence even if at great expense of the employees who aren’t getting much hazard pay or any other benefits.
The pandemic apart from shifting ways people work and how Amazon works It also majorly changed the way people shopped. People were already buying online for a while now but the pandemic made it a lot worse(depends on who you ask) especially for high street stores as we saw 175,000 retail workers laid off3 whilst Amazon employed 8,000 more people. This shows a massive trend towards online taking into consideration online has been growing. As we can see in figure 1 online shopping is still relatively high even though all or most shops have reopened. This means people are still ordering online however there has been a slight slow down and decrease. This can be a good thing for Amazon as they dominate the e-commerce space with roughly a 38- 50% depending on which source is chosen however an antitrust court case against Amazon puts it more at the 50% figure of it under their control before the pandemic and could potentially increase. So the increase in online sales and the increase in the usage of Amazon over the pandemic has definitely increased its influence as they both sell on their platform and own the platform on which the selling happens. Which is a very powerful combination especially as more people are selling on Amazon. This has led to allegations of predatory pricing and excessive control. However these are only allegations and cannot be given full credit as they are still only allegations which means it can’t really be discussed whether Amazon’s influence means it exerts more control over its 3rd party merchants.
Amazon is also in various other sectors like delivering groceries with WholeFoods and also has AWS which is a cloud service provider. AWS during the pandemic crossed the $10 billion mark worth of sales. This is due to an increase in demand from companies like Netflix, Zoom and Slack. An increase in demand means an increase in revenue but also an increase in the services Amazon provides which gives them more leverage.
Another way that Amazon’s influence has increased over the pandemic is through spending very large amounts of money to be able to continue and also by investing in companies and people to help them continue operations. Whilst many people are becoming unemployed, Amazon is hiring another 175,000 additional employees. This amount of investment is required by a surge in online shopping by customers7. This allowed Amazon to handle the boost that people staying at home gave it which increased its sales massively- $75.4 billion in revenue which is a 26% gain over 20197. Amazon also spent about $4 billion on covid safety measures during Q2 of 2020 to allow workers to continue working throughout the pandemic. However not everything is in Amazon’s favour as they are using the pandemic to buy struggling businesses at lower prices than they would be normally this includes deliveroo a food delivery company, AMC entertainment Holdings Inc which is the largest cinema operator in Europe and North America, and is reportedly buying J.C Penny. However Amazon buying J.C Penny is speculation so as such I won’t be commenting about it as nothing has happened and it hasn’t been confirmed so it wouldn’t be right to speculate. However Amazon buying these companies expands their reach and Amazon buying AMC further cements their control over the entertainment industry as they have prime video which is another major entertainment provider. Deliveroo is also under their portfolio and it is a food delivery company. This is similar to when Amazon had a takeout company which however got closed. So with this investment Amazon is re entering the market with takeaways also with the investment Deliveroo will also have near market domination so Amazon’s influence has certainly gone up because of the investment it has made. However, all these expenses have increased their debt so much that it is possible for it to get a credit rating downgrade which will increase borrowing costs which will slow down growth and other investment ventures. However that might be unlikely as according to Moody’s it will need another $35 billion in loans to get there. However during the pandemic Amazon got an upgrade in its credit rating so the overall impact of this move will be limited which means that Amazon would have increased their debt load without harming it’s credit rating which can help Amazon overall.
Some of the expenditure went towards expanding its fulfillment infrastructure which also helped full its expansion. This expansion in fulfillment added an extra 250,000 workers. This expansion is fuelled by the pandemic and the surge of online orders caused by people staying at home. This comes at the end of reporting $6.3 billion in sales caused by a spike in usage before the busiest time of the year which is the holidays. However this comes at the cost of $25.3 billion throughout the pandemic which is 120% more than 2019. The effects of this is an increase of capacity which allows them to increase deliveries which they did as they sold nearly $100 billion worth of items during this period. However Amazon imposed some restrictions on what sellers can sell on their website Amazon only would stock essential items and high demand items. However Amazon didn’t say how this was calculated which caused problems as some products which were similar might have different outcomes in this decision made by Amazon.10 This has the unintended consequence of near control of independent merchants who use Amazon as a selling platform though since they lifted the order there have been problems restocking items which forced these merchants to pay third party transport companies whilst still paying Amazon’s fees. In this instance Amazon’s influence definitely increased as they still managed to make money even though they had to do little work whilst strong arming 3rd party sellers which also can create a power in balance in Amazon’s favour.
This isn’t the end of Amazon’s investment spending as they have invested $1.2 billion in a self-driving vehicles company called Zoox. This investment will help in its delivery services10 however I don’t see this as a possibility as self driving cars are still a way away on the other hand the pandemic could have forced this company to seek extra funding to support its operation so Amazon helped like they did with Deliveroo as they were on the brink of bankruptcy. Amazon is also investing more in their own cargo plane fleet by leasing 12 more planes this is in a bid to make delivering products easier as they’ll own the items to do it. Another way this benefits Amazon is that it lessens their demand on other freight companies for instance UPS and FedEx and also it can be cheaper to lease them than rely on other companies as these companies have to make a profit as well as Amazon trying to make a profit.
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