Amazon.com, Inc.: Tackling Challenges and Building Resilience amidst the Covid-19 Pandemic
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Case Code: BSTR605 Case Length: 16 Pages Period: 2020-2021 Pub Date: 2020 Teaching Note: Available |
Price: Rs.500 Organization: Amazon.com, Inc. Industry: Retailing Countries: United States, United Kingdom, India Themes: International Business, Services Marketings, Crisis Management & Conflict, Operations and Supply Chain Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The COVID-19 Pandemic
The Covid-19 outbreak started in a wet market in Wuhan, which sold fish, birds, and both live and dead animals. Covid-19 was different from the severe acute respiratory syndrome (SARS) and Middle Eastern respiratory syndrome (MERS) in that 80% of the people affected by it reported only a mild infection. However, many people carried the disease without displaying any symptoms, which made it difficult to control its spread. Covid-19 was known to spread via droplets when an infected person coughed or sneezed. When others touched the surfaces on which the droplets had landed with their hands, they spread the virus further. People could catch the virus if they touched their eyes, nose, or mouth with their infected hands. The single most important thing that people could do to protect themselves from the virus was to clean their hands by washing them frequently with soap and water or by using a hand sanitizer...
Strategy During COVID-19 Pandemic
From the end of the late 1990s till 2020, Amazon invested tens of billions of dollars in building and developing its fulfilment network. The investment led to the retailer touting the superiority of its fulfilment abilities and to its becoming the first among online retailers to roll out same-day and next-day e-commerce deliveries. However, free delivery and rapid delivery came at a cost for Amazon. In 2014, free shipping led to Amazon incurring costs of more than US$4.2 billion...
Other Initiatives
Some research scientists, program managers, procurement specialists, and software engineers at Amazon were shifted from their regular jobs to form a dedicated team working to build incremental Covid-19 testing capacity. The team was building its first lab and had started a pilot to test front-line employees...
Amazon Gains
As of March 2020, Amazon accounted for 40% of online sales in the US, according to online research firm eMarketer. Analysts felt that the Covid-19 pandemic would help the retailer in gaining more sales as most of the consumers were forced to stay indoors and ordered online...
Supply Chain Issues
The Covid-19 pandemic and the lockdown led to an unprecedented increase in demand at Amazon for household goods, groceries, and medical supplies such as hand sanitizers and face masks as consumers shifted to online stores rather than taking the risk of getting infected by Covid-19 at physical stores. But the demand placed a huge stress on the e-commerce giant's supply chain...
Stakeholder Tension
To add to its woes, the e-commerce giant faced several protests from workers for keeping its warehouses open for delivery. Employees complained that Amazon did not notify them about the increasing number of Covid-19 cases at the workplace...
Looking Ahead
Bezos said that while the retailer had had a tough Q1 of 2020, it would suffer losses in Q2 of 2020 as it was planning to spend around US$4 billion on Covid-19 related costs such as increasing PPEs for workers and more intense cleaning of warehouses, and nearly US$300 million on developing internal Covid-19 testing capabilities...
Exhibits
Exhibit I: Amazon's Consolidated Statements of Operations
Exhibit II: Selected Consolidated Financial Data
Exhibit III: Amazon's Consolidated Net Sales by Segment Year ended December 31, (in US$ millions)
Exhibit IV: Amazon's Net Sales by Products and Services Year Ended December 31, (in US$ millions)
Exhibit V: Covid-19 Statistics – Top 15 Countries (Data as of May 27, 2020, 00.00 GMT)
Exhibit VI: Amazon's Stock Chart
Exhibit VII: Amazon Net Sales Growth by Segment
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