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According to Reuters reports, since mid-February, the market value of Amazon has increased by more than US $ 90 billion, the highest growth rate among US stocks. CEO Jeff Bezos’s value has soared by 5 billion US dollars-149 billion US dollars worth, has more than doubled Mark Zuckerberg.
 

In the special period when the new coronary pneumonia epidemic raged, Amazon ’s core businesses such as online retail and cloud computing have shown unprecedented growth potential. This is directly reflected on the book: According to the Q1 financial report released by Amazon in fiscal year 2020, Q1’s total revenue reached 75.5 billion US dollars, an increase of 26% from last year’s 59.7 billion US dollars, which was higher than analysts’ general expectation of 73.6 billion US dollars.
 

However, the net profit of Amazon Q1 did not “grow up against the trend.” On the contrary, due to the increase in operating costs such as logistics costs and worker salary increases during the epidemic, the net profit was only US $ 2.5 billion, down 29% year-on-year. Although Amazon’s cloud business, AWS, exceeded $ 10 billion in revenue in Q1, as Microsoft Azure, Alibaba Cloud, and Google Cloud eroded the market, the growth of AWS, which accounts for nearly half of the cloud computing market share, continued to slow.
 

“If you are an Amazon shareholder, (see this) you may want to sit down.” Bezos rarely released another statement after the quarterly report was published. He said that Amazon plans to use the entire profit of Q2 (about 4 billion US dollars) to deal with the epidemic, and may also lose an additional 1.5 billion US dollars.
 

The giant “can’t make ends meet”
 

During the Q1 period, the net sales of Amazon ’s online stores were US $ 36.6 billion, an increase of 24% year-on-year; the net sales of physical stores were US $ 4.6 billion, an increase of 8% year-on-year. Net sales of third-party seller services were $ 14.4 billion, up 30% year-on-year.
 

Amazon CFO Brian Olsavsky said in the earnings conference call that SKU sales of necessities, personal hygiene products, and even home office facilities have skyrocketed since the beginning of March. Even during the epidemic, the physical store business has grown unusually. But in the past year, the growth rate of this business has only hovered around 1%.
 

The surge in retail orders also pushed Amazon’s membership subscription service Prime to a new level of development.
 

At the beginning of this year, Amazon Prime members reached 150 million, and they were able to experience faster and free shipping and streaming services. Research company Second Measure estimates that during the two weeks from March 16 to 23, Prime’s US sales increased by 10% year-on-year. During the Q1 period, Amazon’s net sales of subscription services rose 28% year-on-year to US $ 5.5 billion.
 

 

Operating pressure under special periods will continue to affect the performance of Amazon Q2 ｜ Visual China
 

It can be imagined how much challenge this brings to Amazon in terms of logistics, labor and other operating cost control. According to Business Insider reports, since March this year, Amazon has recruited 100,000 new employees, while also recruiting 75,000 warehouse workers and logistics drivers. In fact, before the spread of the epidemic, Amazon invested heavily in expanding its delivery operations, trying to make “one-day delivery” normal.
 

As a result, Amazon ’s shipping costs soared by 49% to $ 10.9 billion. Operating income during the Q1 period (Operating Income) was $ 400 million less than last year ’s $ 4 billion.
 

Cloud business is eroded
 

Amazon ’s AWS net sales during the Q1 period were US $ 10.2 billion, up 33% year-on-year and accounting for 14% of total revenue. The proportion of AWS in total sales increased by 1% compared with the same period last year (13%), and the operating profit was also higher than last year’s 2.2 billion US dollars. For Amazon, which has a low-margin e-commerce business as its core, cloud business is still a big driver of its revenue growth.
 

 

Cloud meeting and other application usage is excitingIncrease, which is good news for AWS as “infrastructure” ｜ Visual China
 

However, with the entrance of giants such as Microsoft, Ali, and Google, Amazon AWS’s market share has been eroded.
 

According to the latest Gartner report, Amazon AWS ’market share has dropped from 47.9% in 2018 to 45% in 2019. At the same time, Azure, Alibaba Cloud, and Google Cloud accounted for 17.9%, 9.1%, and 5.3%, respectively.
 

Starting from Q2 in 2019, the growth rate of AWS has dropped to within 40%, and has continued to decline since then. As other giant companies begin to value and deepen their cloud services business, the growth of the second and third places will put AWS under great pressure. And how to maintain the share and achieve steady growth again is a problem that Amazon needs to focus on.
 

Make money for the next quarter
 

Amazon ’s profit in Q1 is not very good compared with other giant companies that also released quarterly reports last week. For example, Facebook ’s net profit is close to US $ 5 billion, and Microsoft ’s year-on-year growth of 22% to US $ 10.752 billion.
 

“If you are an Amazon shareholder, (see this) you may want to sit down.” Bezos rarely issued a statement after the quarterly report, telling shareholders that they might be more dissatisfied with the decision : “In the next Q2, Amazon is expected to earn about 4 billion US dollars or more in operating profits. But the current is a special period. Amazon hopes to spend the entire 4 billion US dollars, or more, on outbreak-related expenditures. Customers provide better products and services, while ensuring the health and safety of employees. “
 

Amazon said it would invest the money in personal protective equipment, cleaning facilities, and the salaries of part-time workers, and it would spend hundreds of millions of dollars to develop a new virus detection service. Earlier, Amazon had purchased 100 million masks and required all employees to wear them. It also purchased more than 1,000 thermal cameras and more than 31,000 thermometers for daily inspections. It also uses AWS to build a centralized library to store the latest and public data sets to help medical staff and officials fight viruses.
 

For the next quarter’s performance guidance, Amazon expects revenue to fall in the range of 75 to 81 billion US dollars, an increase of 18% to 28% year-on-year. In response to the new crown epidemic-related projects, Q2 expenditure will reach 4 billion US dollars. At the same time, the operating profit is expected to vary greatly, ranging from a loss of US $ 1.5 billion to a profit of US $ 1.5 billion, compared with an operating profit of US $ 3.1 billion in the same period last year.
 

In the past three months, Amazon has already put forward “anti-epidemic” matters 6One hundred million U.S. dollars.
 

May 1st Labor Day, workers from companies such as Amazon, FedEx and Wal-Mart in the United States went on strike, calling on the above companies to provide better security measures in the event of an outbreak. Among them, the organizers of the Amazon group said that thousands of employees across the country participated in the operation. This may make Bezos more convinced that ensuring the health and safety of employees and providing customers with better products and services is a responsibility that Amazon must bear.
 

In the epidemic, the online retail and cloud business, which has grown significantly, not only boosted Amazon’s revenue, but also shaped people’s consumption habits. To gain the trust of more consumers in the “post-epidemic world”, at this time to give back to the society and improve social evaluation, Amazon made a wise choice. The profit of Q1 is frustrated, but Bezos also wants Amazon Q2 to “make a living” because he knows that this is an opportunity that must be seized, and he must “fight hard.”