Even After the Pandemic Ends... Untact Will Continue

Consumer Trends Seen Through Amazon Earnings and US Q1 GDP
Amazon Q1 Net Profit Triples
Changed Purchasing Behavior Expected to Continue
GDP 6.4% with Industry Disparities Confirmed

[Image source=Yonhap News]

[Asia Economy New York=Correspondents Baek Jong-min and Jo Yoo-jin] The American online retail giant Amazon has announced surprising earnings. This performance exceeded expectations that the benefits from the COVID-19 pandemic, which lasted for a year due to the resumption of economic activities, would be limited. Amazon's results are noteworthy as they provide insights into how the economy and industries worldwide will evolve post-COVID-19, not only in the United States but globally.

◇Changed Consumption Patterns Are Becoming Permanent= Amazon's first-quarter (January to March) revenue, released on the 29th (local time), surged 44% compared to the same period last year, reaching $108.5 billion (approximately 120 trillion KRW). This was an 'earnings surprise' that exceeded market expectations. Net profit tripled to $8.1 billion.

Considering that e-commerce companies typically report weak first-quarter results, this outcome dispels concerns that e-commerce sales might decline after the resumption of economic activities. Tuna Amobi, a CFRA analyst, explained, "Amazon's first-quarter results signal that changes in consumer purchasing behavior brought about by COVID-19 will continue."

Amazon also forecasted second-quarter revenue to increase by 24-30% year-over-year, ranging from $110 billion to $116 billion. This marks the third consecutive quarter with over $100 billion in sales. Amazon plans to further boost sales in the second quarter by holding its large-scale discount event for members, 'Prime Day.'

Amazon has been regarded as one of the biggest beneficiaries of COVID-19. The surge in earnings that began in the first quarter of last year soared alongside the spread of the pandemic. Even consumers who previously did not shop online started using Amazon, leading to a boom so intense that labor and warehouse shortages occurred.

◇The Other Side of Untact Growth= Amazon's rapid growth suggests that even as the economy normalizes after the pandemic, our society will not return to the pre-pandemic state.

Even if offline stores reopen, they cannot be certain that customers will return. Employment structures are being reorganized around online platforms, causing labor shortages in offline sectors. The Wall Street Journal reported that some restaurant owners are even offering attendance bonuses to hire staff.

Restaurant owners unanimously say it is difficult to find workers even when paying higher wages than before COVID-19. They worry that former employees are leaving for jobs at companies like Amazon and not returning.

The U.S. first-quarter Gross Domestic Product (GDP) announced that day clearly showed a mixed situation across industries. While the U.S. first-quarter GDP growth rate reached 6.4%, growth was seen in sectors such as automobiles, furniture, leisure goods, housing, and information technology, whereas travel and transportation services remained sluggish.

Regarding this, The New York Times (NYT) expressed concern that highly unequal growth among sectors is occurring and that this will have significant long-term impacts on companies and workers.