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Home Archive by category Jeff Bezos Inc on Thursday reported its biggest profit ever as consumers turned to the online retailer for their shopping needs and businesses paid it more to warehouse and advertise their products.

Shares rose four per cent in after-hours trade.

Since the start of the U.S. coronavirus outbreak, shoppers have relied increasingly on Amazon for delivery of home staples and supplies. While brick-and-mortar stores closed, Amazon has now posted four consecutive record quarterly profits, attracted more than 200 million Prime loyalty subscribers, and recruited over 500,000 workers to keep up with surging consumer demand.

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That has kept the world’s largest online retailer at the center of workplace tumult. Its warehouse in Bessemer, Alabama, this winter became a rallying point for organized labour, hoping staff would form Amazon’s first U.S. union and inspire similar efforts nationwide.

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Workers ultimately rejected the union bid by a more than 2-to-1 margin, but Chief Executive Jeff Bezos said the saga showed how the company had to do better for employees.

The company meanwhile has been facing litigation in New York over whether it put profit ahead of worker safety in the COVID-19 pandemic.

Amazon’s operation has been unfazed by these developments. Net sales rose 44 per cent to $108.52 billion in the first quarter ended March 31 from $75.45 billion, beating analysts’ average estimate of $104.47 billion, according to IBES data from Refinitiv.

Bezos touted the results of the company’s cloud computing unit Amazon Web Services (AWS) in a press release, saying, “In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating.”

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Andy Jassy, who had been AWS’s CEO, is scheduled to succeed Bezos as Amazon’s chief this summer, said the unit continues to be a bright spot. Just last week, for instance, Dish Network Corp announced a deal to build its 5G network on AWS. The unit increased revenue 32 per cent to $13.5 billion, ahead of estimates of $13.2 billion.

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Adding to Amazon’s revenue was its growing chain of physical stores, including Whole Foods Market and its first overseas cashier-less convenience shop, opening last month in the London Borough of Ealing. Amazon delved further into healthcare as well with an online doctors-visit service for employers, representing another area it is aiming to disrupt after retail, enterprise technology and Hollywood.

Profit more than tripled to $8.1 billion.

Amazon, which saw its stock price nearly double in the first part of 2020 as it benefited from the pandemic, has this year underperformed the S&P 500 market index. Its shares were up about 8.5 per cent year to date versus the index’s 13 per cent gain.

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At the same time, spending on COVID-19 and logistics has chipped away at Amazon’s bottom line. The company has poured money into buying cargo planes and securing new warehouses, aiming to place items closer to customers to speed up delivery. It said Wednesday it planned to hike pay for over half a million employees, costing more than $1 billion — and it is still hiring for tens of thousands more positions.

Amazon said it expects operating income for the current quarter to be between $4.5 billion and $8 billion, which assumes about $1.5 billion of costs related to COVID-19.

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While far behind ad sales leaders Facebook Inc and Alphabet Inc’s Google, Amazon is winning business because advertisers’ placements often result directly in sales, reaching customers who are on Amazon with an intention to shop. Amazon said ad and other sales rose 77 per cent to $6.9 billion, ahead of analysts’ estimate of $6.2 billion.

© 2021 Reuters

A man in a suit gestures during a presentation.

Amazon CEO Jeff Bezos used his final letter to Amazon shareholders to focus on employee well-being and the company’s significant carbon footprint.

Bezos’ new emphasis on employee well-being comes on the heels of a contentious unionization vote at one of its warehouses in Bessemer, Alabama. Though Amazon won, with 1,798 employees voting against unionizing out of 3,041 total ballots cast, participation was low, with just over half of eligible voters participating. Labor organizers have made it clear that even if unionization votes continue to go against them, they’ll keep pressuring Amazon through other means.

That strategy may be working. Bezos dedicates a significant portion of his letter to both the unionization vote and to employee well-being. Whereas Bezos wrote a single paragraph about a tuition reimbursement program three years ago, he wrote nearly 1,200 words about pay rates, employee satisfaction, and workplace safety this year.

“Does your Chair take comfort in the outcome of the recent union vote in Bessemer? No, he doesn’t,” Bezos wrote. “I think we need to do a better job for our employees. While the voting results were lopsided and our direct relationship with employees is strong, it’s clear to me that we need a better vision for how we create value for employees—a vision for their success.”

Among his proposals are new staffing rotations that he hopes will reduce repetitive stress injuries at warehouses. Injuries aren’t uncommon at warehouses—many actions are repeated hundreds of times per day—but Amazon’s fulfillment centers seem to be particularly prone to injuries, according to an investigation by Reveal. Because Amazon’s warehouse robots move quickly, workers move faster, too, giving their muscles less time to rest between repeated movements.

Bezos also touts the company’s decision to increase Amazon’s minimum wage to $15 per hour, a rate that labor groups have been advocating for since at least 2012. He cites a recent study that says that pay in low-wage areas increased by 4.7 percent when the company bumped rates to $15 per hour.

Climate Pledge

Amazon’s enormous carbon footprint has also drawn scrutiny in recent years, and Bezos again spills a fair number of bytes discussing the matter. The company’s carbon footprint surged in 2019 to over 51 million metric tons of carbon dioxide, which is only about 6 percent less than Peru’s annual emissions. 

Bezos points out that Amazon helped co-found the Climate Pledge, which commits companies to reach net-zero carbon emissions by 2040. As part of that pledge, Amazon has installed or purchased 6.9 gigawatts of wind and solar capacity that produce 20 million gigawatt-hours of electricity per year. The company has also invested $1 billion in automaker Rivian and has placed an order with the startup for 100,000 electric delivery vans. By 2030, the EVs will shave the company’s footprint by an estimated 4 million metric tons of carbon dioxide per year. Amazon has also invested $2 billion in a climate tech fund, and Bezos himself has committed $10 billion in grants for climate-oriented companies and organizations.

The Climate Pledge also calls for companies to offset emissions “to compensate for economic activities where low-carbon alternatives don’t exist,” Bezos wrote. Offsets span a range of activities, from planting trees and protecting forests to burning methane from landfills, though most revolve around trees. As a whole, offsets are contentious because of a number of their shortcomings. Some offsets might end up being double-counted, others may not be as permanent as originally intended, and still others may count forests that were already protected, which won’t lead to any net reductions. The Nature Conservancy, for example, has recently come under fire for the way it was calculating offsets from its program, which includes many properties it already owned and protected.

End of an era

This letter is Bezos’ last, since he will be stepping down as CEO later this year, more than 20 years after founding the company that has changed e-commerce. He left an indelible mark on Amazon—one that isn’t likely to fade, as he’s not really leaving. Rather, he’ll be serving as executive chair, a role that will find him overseeing the board and advising the incoming CEO, current AWS head Andy Jassy.

“In my upcoming role as Executive Chair, I’m going to focus on new initiatives. I’m an inventor,” Bezos wrote.