Amazon (NASDAQ: AMZN) shone during the coronavirus pandemic because Americans were forced to place additional orders for delivery in order to find the supplies needed to spend a long time at home. The retailer had his trips – he struggled to keep toilet paper, hand sanitizer, and a few other things in stock, for example. For the most part, however, the online leader has demonstrated its strength.
This is good news for shareholders – not just during the current crisis, but for the long term. Amazon has shown that it has clear assets that it has built over a long period of time, and the coronavirus pandemic has benefited very clearly.
1. Supply chain
People have started to expect delivery in two days or faster in almost all cases. That’s why it was somewhat surprising that Amazon had trouble getting some orders out as quickly as it normally does.
The reality is that no one could have predicted this scenario and planned the race on toilet paper, cleaning supplies and basic groceries. Under these circumstances, Amazon performed incredibly well. And while it mentions long shipping times for some orders, many were shipped well ahead of schedule.
Amazon continues to add capacity, and learning from this crisis will help it during normal operations.
2. Acquisition of customers
Some people who have used Amazon lightly or not at all in the past have had to turn to the retailer for a long period of life at home. These people gave Amazon their credit cards – a big barrier for some people – and many likely bought annual Prime subscriptions.
It seems very likely that many of these people will remain customers of Amazon after the pandemic has passed. They may not order as often, but they will likely order.
3. Proof of concept
Why order toilet paper from Amazon when it’s not in short supply? Because toilet paper takes up a lot of space in your grocery basket. The same applies to many things. It’s just convenient to have your stuff delivered to your door.
Millions of people, of course, knew this, but millions of others are learning how easy it is to order on the platform. In some cases, people can also learn about the items sold by Amazon that they never expected it to have.
A bigger online leader
Amazon will emerge on the other side of the coronavirus pandemic in better shape than before. It was already a retail leader with an infrastructure that gave it a considerable advantage over almost all of its competitors. Now it’s all of that and more – people have come to rely on it. People don’t order from Amazon because they have to – well, most don’t – they order from Amazon because it’s cheap, easy, and the selection is amazing.
It is difficult to see why this will not remain the case even when it is OK to leave the house. Amazon won’t replace traditional stores for most people, but it can take over most purchases and eliminate the hassle of having to go anywhere or pick up anything.