Jeff Bezos, Amazon's (NASDAQ:AMZN) CEO and founder, and one of the most respected minds in business, recently released his annual shareholder letter. But rather than focus on the company's long-term thinking or its creative approaches to innovation as he has in the past, Bezos spent much of the letter discussing the COVID-19 pandemic and Amazon's role in the disaster.
There's no doubt that Amazon's services have been in high demand since the crisis began as the company hired 100,000 new employees in March and is now seeking to add another 75,000 workers. However, beyond the immediate impact on Amazon's business, Bezos took time to explain other key ways that the company is responding to the crisis and how it's keeping its long-term focus beyond the pandemic. Here are four key takeaways from the letter.
1. Testing is crucial
Like many medical experts, Bezos sees testing as crucial to overcoming the virus and making work and daily life safe again. Bezos said:
Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running. For this to work, we as a society would need vastly more testing capacity than is currently available. If every person could be tested regularly, it would make a huge difference in how we fight this virus. Those who test positive could be quarantined and cared for, and everyone who tests negative could reenter the economy with confidence.
Amazon is now developing its own incremental testing capacity, creating a new team to tackle one of the biggest challenges of the outbreak. The company is building its first lab and hopes to start testing frontline employees soon.
The new project could also signal a further move into healthcare after the company launched its Amazon Care pilot last year and formed a healthcare joint venture called Haven with Berkshire Hathaway and JPMorgan Chase.
2. AWS is rising to the occasion
In the business media, much of the attention on Amazon has focused on its e-commerce operation, which has ramped up to meet demand for essential items like food, medicine, and cleaning supplies. However, Bezos said that Amazon's cloud computing division, Amazon Web Services, is also playing an important role.
Among the organizations relying on AWS during this crucial time are hospital networks, pharmaceutical companies, and research labs. In addition, the transition to virtual learning in schools around the world has increased demand for AWS' infrastructure capacity.
AWS is also helping to provide up-to-date information on the virus, and the company has developed an AWS program to support bringing more accurate diagnostic solutions for COVID-19 to market.
Those initiatives show that demand for AWS, which has become Amazon's most profitable business, continues to grow and bodes well for its long-term growth as well.
3. Amazon makes an overture to employees
Amazon often finds itself a target of labor activists, and the coronavirus is no different. Some of its warehouse employees have contracted the virus, and a warehouse worker in New York was fired after trying to stage a walkout.
Bezos failed to address those criticisms but noted that the company had raised its base wage by $2 per hour to $17 through April and is paying double for overtime, as opposed to the regular time-and-a-half rate, giving frontline workers a minimum of $34 per hour for overtime.
That additional pay will cost the company more than $500 million through April, but Bezos called it "the right thing to do under the circumstances." Amazon has also started a $25 million fund for independent contractors like Flex drivers in need of assistance and has introduced safety protocols, including sanitizing shared spaces, providing face masks, and implementing temperature checks.
4. Amazon is making progress on its Climate Pledge
Last year, Amazon introduced the Climate Pledge, making a promise for itself and other corporations to meet the goals of the Paris Agreement 10 years early by 2040, and it said it would announce new signatories soon. Updating investors on its progress, Bezos said the company now has 86 solar and wind projects with the capacity to generate more than 86 megawatts of renewable energy, enough to power 580,000 homes.
After making an agreement to purchase 100,000 electric vans from Rivian, Amazon expects to have 10,000 of them on the road by 2022. The company is also aiming to reach 80% renewable energy by 2024 and said it has saved 1.4 billion shipping boxes and 810,000 tons of packaging materials through its Frustration-Free Packaging program.
Amazon will reveal more details on the impact of COVID-19 in its first quarter earnings report on April 30, but the company's long-term mentality and focus on a broad range of emerging technologies is clearly paying off during the crisis.
From e-commerce to cloud computing to video streaming and even voice-activated technology, it's hard to find an Amazon business that isn't getting some kind of tailwind from the current crisis, and that will serve to strengthen the company's already significant competitive advantages in the aftermath of the pandemic.