- Amazon to deliver home-testing coronavirus kits
- Grocery delivery expands as Americans are shut-in
- AMZN shares are outperforming the S&P500 through downturn
As American cities are shut-in amid the coronavirus pandemic, Amazon.com has made its services indispensable across its multiple business channels. Prime shoppers are ordering household essentials, groceries, TV shows and movies and more at rising levels. With over 150 million Prime members paying as much as $119 per year for standard memberships, its customer loyalty has become a formidable moat during the economic downturn.
Recently we learned that Amazon (AMZN) will deliver and pick up home testing kits for the novel coronavirus in a Seattle trial. The initiative will be performed by its Amazon Care unit in collaboration with the Seattle Coronavirus Assessment Network, a research effort backed by Bill Gates. “We are grateful to be surrounded by a strong community of public health, global health and academic leaders and are eager to leverage Amazon Care’s infrastructure and logistics capabilities to support this local effort,” said Amazon Care director Kristen Helton in a statement to CNBC. Over in the U.K., the government has reportedly approached the tech giant to use its couriers to deliver coronavirus tests to frontline health and social care workers.
Due to its size, Amazon can fill in where government health care systems are failing. This is just another example of its services proving indispensable amid a pandemic that has confined people to their homes. It’s why AMZN shares have performed so much better than the broader market (see chart below). Experts are also asking if the “techlash” is over. Amazon and other large tech companies were until very recently targets of public scorn and regulatory scrutiny due to their sizes and misuse of data, but they are now receiving kudos as they wield those great powers to help society through a dark time.
Most crucial, however, is the breakthrough in the groceries segment the company has received. People are turning to the website for vital supplies and food items, including perishables, they would normally go to smaller neighborhood stores they trust more for. The company is hiring 100,000 more U.S. workers, raising pay and prioritizing medical supplies and household staples in its warehouses as demand surges.
There’s no doubt infections will peak and things will return to normal at some point this year. But people’s habits will have changed. Besides washing our hands more, it’s also likely we’re going to to turn to Amazon for the basics in our households more. E-commerce as an industry depends on shaping and reshaping purchasing habits. A good example of this is the launch of Prime 15 years ago which changed how customers used the platform. According to Feedvisor, 85% of Prime shoppers visit Amazon at least once a week compared with 56% of non-Prime shoppers. About half the number of Prime members who visit Amazon once a week will wind up purchasing.
Jeff Bezos’ company may emerge from all of this even more dominant than before if it is able to perform satisfactorily despite the excess burden. As Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, said, “We could see the distribution of consumer goods collapse into a single pipeline named Amazon.” Whether this is desirable or good for workers or the economy as a whole is something regulators will have to tackle later.
While the rest of the world has been monitoring the virus outbreak, Amazon quietly bid for four locations of bankrupt supermarket Fairway in New York and New Jersey.