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New products for business clients
Amazon Business, which is the company's division focused on enterprise clients, has recently unveiled several innovations that should make businesses' jobs easier. One of them is the Amazon Business App Center, where clients can connect their Amazon Business account with more than 25 third-party applications from around the world for accounting or business analytics tools. Next is the budget management tool, which brings enhancements such as real-time budget tracking, pre-approval of purchases and consolidated purchase orders. These features allow businesses to have better financial visibility and control over spending, and are already available in the US, Canada, Germany or France, among other countries. Such innovations indicate Amazon's ability to compete with other giants such as Microsoft, which also provides enterprise-oriented software products and is a dominant player in this area.
Amazon's work in healthcare
Amazon is also working in the health care sector, specifically with its subsidiary Amazon Pharmacy, which was established in 2020 during the Covid pandemic, providing home delivery of various medications to its subscribers. Now, the company has announced an expansion of that program through its RxPass service, which means customers will be eligible for a wider variety of medications from multiple manufacturers. This is Amazon's way of competing with pharmacies like CVS or Walgreens, which have a long running history. Subscription benefits also include discounts of 40% to 80% depending on the type of medication. According to the vice president of Amazon Pharmacy, such programs help motivate patients to adhere to their prescribed medication while helping them reduce the costs associated with it.
Other Spheres of Amazon’s Influence
It's worth remembering that Amazon is a technology company and has its own horse in the AI race. The company is aware of the enormous growth of this sector and therefore makes use of this technology in collaboration with NVIDIA in its Amazon Web Services (AWS) division, which is focused on cloud services and needs data centres to run with powerful and energy-efficient GPUs. Amazon also operates its own streaming service, Prime Video, containing thousands of movies, TV shows and other programmes, competing with giants such as Netflix and Disney+. For its Amazon Prime subscribers, the company offers, among other things, an access to the streaming platform, in addition to almost unlimited delivery options.
Allegations of adverse working conditions
Despite its first-class service, the Amazon name is also associated with controversy, particularly in relation to its employees. The most recent is a $5.9 million fine from the California’s department of Industrial Relations for failing to inform employees of their production quotas, which they are penalized for failing to meet. This case involves 2 Amazon warehouses. The law states that workers are to be notified in writing in advance of meeting such production goals. The company has appealed this decision and has even denied the existence of fixed quotas in its warehouses. These suspicions are a major reason why more and more workers across the country have joined unions in recent years. Amazon has previously faced criticism about the inadequate pay conditions for its employees in distribution centres. Cases such as this undermine the reputation of the company operating in so many areas and may harm it in the long run.
Continued growth
Despite challenges, Amazon is still a dominant player in sales and distribution, leaving its competition far behind. The company's annual revenues are growing tremendously, despite high inflation and a generally unfavourable economic situation. For 2023, they reached the sum of $574.8 billion, with a year-on-year increase of 11.8%. In the first quarter of 2024, Amazon recorded sales worth $143.31 billion, which represented a year-on-year increase of 12.5%, and net profit increased by 228.9% to $10.43 billion compared to the same period a year ago.
Stock valuation at all time high
The company's shares have already gained around 25% since the beginning of this year, erasing all the losses caused by the cost-of-living crisis, and currently their price is at historical highs. Amazon's market capitalization approaches $2 trillion and is the 5th most valuable publicly traded company in the world. *
Source: Investing.com*
Conclusion
Against this background, it is clear that Amazon has a broad portfolio of activities, thus diversifying its business operations considerably and thus being sufficiently resilient to the risks associated with stagnation in certain sectors. Throughout its existence, the conglomerate has demonstrated a tremendous ability to adapt to emerging market trends and that this strategy is paying off is proven not only by the economic prosperity of the company, but also by the development of its value on the stock market, where it is in a bullish trend.
Sources:
https://www.google.com/finance/quote/AMZN:NASDAQ
https://companiesmarketcap.com/
https://aws.amazon.com/nvidia/
https://www.aboutamazon.com/news/entertainment/what-you-need-to-know-about-prime-video
* Past data is not a guarantee of future returns.
Warning! This marketing material is not and should not be construed as investment advice. Past data is not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
