The world’s largest online retailer Amazon has a strong position and well prepared for the holiday quarter 2020, which, despite the pandemic, promises to be the best of the year.
Today, for investors, a stock portfolio which are not yet part of the shares of Amazon (AMZN), have a chance to buy them with a 5.8% discount due to the decline in the last quarter.
Amazon shares, an increase of 68% since the beginning of the year, has been volatile in the last quarter, as news of the advent of vaccines against COVID-19 made it difficult to evaluate their value investors.
The global pandemic of mers on the one hand, benefited the companies of electronic Commerce, as consumers replaced purchases in physical stores to online stores, on the other hand, increased unemployment and reduced purchasing power. The unemployment rate in the U.S. in October was 6.9%, compared with 3.5% in February.
According to research by Deloitte, total retail sales in the U.S. this holiday season 2020 (including physical and online sales) can grow by only 1-1,5% compared to the previous year.
However, there are at least five reasons why this holiday fourth quarter (October to December) should be successful for Amazon.
With the increase in the incidence of COVID-19 some countries re-impose quarantine restrictions and the stores limit the number of buyers both in them.
So, the largest supermarket chain in the US, Walmart (WMT) this week said that starting Saturday will again introduce restrictions on traffic in stores. At the same time, all secondary shops (except for food and Essentials) are closed in France and England in November due to quarantine measures.
Statistics of growth of e-Commerce
The previous quarter, Amazon showed excellent results in electronic sales and the company coped well with the jump orders and increased burden on the logistics division.
Income of the second quarter, Amazon earned from business in North America (including retail, etc.), increased by 39% to $59.4 billion and international segment increased 37% to $25.2 billion Total quarterly profit increased three times compared with last year.
Although state governments do not require physical stores to close down and quarantine measures are now less rigid than in previous midst of the pandemic, morbidity statistics COVID-19 in the United States forcing people to limit contact and visits to physical stores.
According to forecasts from Deloitte, e-Commerce sales during the holiday season of 2020 will grow by 25-35% in comparison with growth of 14% over the same period last year. According to the report, sales of e-Commerce in the U.S. over the festive period could reach $196 billion.
The benefits of Prime shipping
The number of members of Amazon Prime – rebate program, for which members pay an annual subscription, has reached 150 million people. Free two-day shipping and one-day delivery services are some of the key benefits of this program, so it is not surprising that most participants will choose the Prime site Amazon for their holiday shopping.
The latest innovation in service delivery was the Amazon non-contact delivery to a garage to the buyer. On the day of arrival of the shipment, the customer is not found with the courier personally, and remotely opens the garage and sees the camera for a delivery process, a special application notifies the participant about the completion of the delivery. This month, Amazon expanded the service to the garage to “tens of millions” of Prime members in more than 4,000 cities in the United States. It was previously available in 50 cities.
In order to meet the increased demand, Amazon has hired many additional staff, becoming the only company in the U.S. with so much hiring during a pandemic.
The positive experience customers received at the beginning of the pandemic
Quick delivery, discounts and a huge selection were, and remain, the benefits of Amazon, at the same time, the company proved its leadership at the beginning of the pandemic, when people moved EN masse to online shopping. Customer satisfaction with service quality and the ability of Amazon to deliver the goods in the darkest days of the crisis, have formed a trust and loyalty to the giant e-Commerce that should certainly help him during the holiday season.
Early start of sales
Early start of sales and the lengthening of their time should also benefit quarterly sales Amazon. Sale Black Friday this year takes longer than expected, in addition to attract buyers will have a positive impact on the workload of the service delivery.
This will have an impact on the increase of profit of Amazon that will affect the growth of the stock.