The COVID-19 pandemic has supercharged online sales, with a number of companies exceeding expectations and seeing their profits soar.
Aug. 24, 2020
Since the global pandemic took hold, there has been a huge boom in e-commerce sales as people avoid physical contact. Online sales increased by more than 30% within the first two quarters of 2020 in the U.S., in which consumers spent around $370 billion. There are two companies that have been experiencing huge gains, Amazon (NASDAQ: AMZN) and Nike (NYSE: NKE).
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The company is a giant one-stop shop for consumers and is thriving in the current economic climate. Amazon recently announced it would be hiring an extra 3,500 workers to keep up with the demand across the U.S. This is no surprise considering its online grocery sales for the second-quarter tripled year-on-year and Amazon delivery capacity soared by more than 160%, while net sales jumped by about 40% to $89 billion.
The company also spent a huge amount of money on advertising to generate traffic to its popular website. The Seattle-based giant purchased $1.8 billion of advertisements in 2019, an increase of 72.5% compared to two years prior. It is paying off, with $4.22 billion worth of revenue generated in Amazon’s “other” category for the quarter that is largely comprised of advertising.
There is no sign of Amazon’s massive e-commerce presence slowing down, with net sales expected to be between $87 billion and $93 billion for the third quarter. This would mean around a 24% increase year-on-year. Considering Amazon offers such a wide range of products for customers and delivers them in a speedy time frame, people will continue turning to them to purchase whatever they need, particularly while COVID-19 is present.
The global sportswear brand wasn’t completely immune to the impact of the coronavirus, with the stock down as much as 40% during March-lows. The company managed to recover these losses with its strong e-commerce performance adding to its steady recovery. Nike’s online sales grew by a massive 75% in its fiscal fourth-quarter in 2020, ending May 31, totalling $5.5 billion for the year.
Nike has exceeded its own expectations for online sales, aiming to reach 30% of digital revenue share by 2023, but instead it made in this period. The sport clothing giant is confident its e-commerce footprint will continue growing and account for about 50% of its total sales in the foreseeable future.
Nike also saw its mobile apps triple the amount of workouts people were doing, with nearly 5 million workouts happening per week in April. Since February, the company says that the app has been downloaded more than 8 million times. Customers can also use the app to purchase products and considering it has been downloaded millions of times, it shows people’s drive to workout at home and also get some new fitness attire.
Nike is now aiming to push its brand strength and reinforce its e-commerce sales through a plan labeled Consumer Direct Acceleration. This will be made up of connecting data, inventory, and membership to offer customers quick access to products. Overall, Nike should be on track to continue its strong online sales along with physical sales as 90% of stores are now back open globally.
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