By Udita Gulati

COVID-19 has drastically changed the dynamic of businesses and the economy. Ecommerce is a sector that has experienced an interesting impact due to how consumer behaviour has adapted in response to the world-wide lockdown. Consumers have turned to online shopping in order to fulfil their needs from home. Businesses that cater to essentials in the healthcare industry such as facemasks and hand sanitizers, and online grocery shopping have experienced a dramatic spike in demand. Amazon is a company that has strategically taken advantage of this consumer demand and reacted accordingly to make provisions for these new needs. 

Negative impacts of COVID-19 

According to Fortune, Amazon was met with an enormous upsurge of orders as customers resorted to online shopping to acquire essential supplies. It had to enlarge its workforce and recruit an additional 175,000 employees in order to meet these demands.  Subsequently, the company faced a labour crisis as workers complained about the lack of adequate safety measures in warehouses. Amazon was quick to implement stronger precautions to keep its employees safe, and hence had to increase its costs. It spent US$4 billion on protective equipment, COVID-19 testing, and increased salaries for frontline workers. 

In addition, Amazon’s USP of prompt delivery was impaired – especially for Prime customers who specifically signed up for one day delivery – thus hurting its reputation. The surge of orders consequently caused its sellers to suffer. For a period of time, Amazon was forced to prioritise medical supplies and household staples at its warehouses. It temporarily discontinued FBA (Fulfilment By Amazon), a service that aids sellers with shipping logistics by sending products directly to an Amazon warehouse, for sellers with nonessential items. Small businesses, that make up 58% of its third-party sellers, were especially vulnerable due to this decision as they struggled to cut costs and re-evaluate their business plans. This left third-party sellers feeling helpless as Amazon failed to provide them with a contingency plan. 

Positive impacts of COVID 

Amazon braved these initial challenges by tackling the issues COVID-19 posed and has, as Time believes, emerged stronger than ever. It announced record sales and profit in spite of the world being in a pandemic. Its website traffic jumped to 2.54 billion visits in March and its revenue increased by 40% compared to a year before from US$89.9 billion to $122 billion. 

As brick-and-mortar stores were forced to shut down, consumers turned to Amazon’s diverse online marketplace to satisfy their needs. After Amazon resolved its operational strain and lifted the restrictions on FBA, customers began to increasingly rely on the wide array of products that could meet their needs in a speedy fashion. Economies of scale and efficiency have allowed the company to quickly adjust to the new external business environment – which works as the catalyst for moving past COVID-19 hurdles faster and stronger than its competitors. 

Not only did Amazon’s B2C model progress, but the B2B model also experienced growth. The company’s cloud business, Amazon Web Services (AWS), faced a higher demand as companies such as Netflix, Zoom, Facebook, Twitter, and Epic Games (developers behind Fortnite) that run on AWS faced a surge in traffic as people spent more time indoors. The rise in working and studying remotely resulted in the demand for cloud services to substantially increase. Amazon’s Twitch in particular has been popular in the digital entertainment industry as professional basketball and football players now stream themselves playing video games due to the hiatus live sports has taken. 

How might COVID affect Amazon’s future? 

As the pandemic prevails, Amazon will continue to reap the benefits of changing consumer habits becoming increasingly dependent on technology. As users spend more time online, they could be inclined to subscribe to other Amazon services such as Prime Video or Audible. The diversity of its product portfolio, ability to continually meet consumer needs, and methods of excelling in its supply chain management – amidst one of the most trying periods businesses have ever faced – bolsters its aggressive hold on customers and aggressive position against rivals. 

That being said, this power comes with its own predicaments. Amazon founder and CEO Jeff Bezos has had to previously partake in an investigation regarding online platforms and market power wherein he was questioned if “in the age of Big Tech, how big is too big?”. Amazon’s drastic growth may push the firm further in this undesirable direction. Its increasing market share and the world’s dependence on it alarms policymakers and makes them question whether the company is too powerful and thus behaving in a monopolistic and anti-competitive manner. 

Stock markets tumbled on Monday as the number of Coronavirus (now officially known as COVID-19) cases increased across the world.

As the centre of the outbreak of the virus, China continues to suffer more than anywhere else. The overwhelming majority of the worldwide cases are still in China, forcing authorities into a frenzy. People are unable to travel for work and millions are stuck in quarantine. American companies with a large presence in China, such as Apple and Nike, are failing to meet revenue projections and are bringing the struggles in China over to U.S. markets.

In such a globalised world, both the health and economic impact of the virus has spread very quickly. Other Asian countries such as Japan, Singapore, and South Korea are growing in fear of what the Coronavirus may bring. Outbreaks in Iran and Italy have shown that the virus is not as well-contained as had previously been thought. Italy’s inclusion in the borderless Schengen Area also plays into fears about the further spread of the virus. Although they have stated it is not a pandemic yet, the WHO has said that the world should prepare for one. Such a statement can only worsen the attitudes of investors.

Analysts believe that the decline in markets is due to the shock in the global supply chain. For example, in the case of companies like Apple and Nike, an absence of manufacturing in China has led to lower production of iPhones or sneakers, interfering with what otherwise would have been a greater number of products to transport and sell across the world. Because there are so many companies that can be involved in any supply chain, negative effects of the virus are being felt all over the business world.

The Nikkei 225, the main stock market index in Japan, closed down 3.34% on 25 February. The FTSE 100 Index in London had its worst single-day performance on Monday since the 2016 Brexit referendum. In New York, the NASDAQ-100 Index NDX opened the week down nearly 400 points (4%) from its closing on Friday the 21st. The Dow Jones has fallen over 1,400 points over the course of both Monday and Tuesday.

While the equity markets have fallen worldwide, investors have flocked to much safer assets. The prices of gold and bonds have risen suddenly as investors have moved their money to prevent any further losses. The rising prices of “safe-haven” assets have coincided with the yield of the 10-year U.S. Treasury note, a benchmark in the pricing of fixed-income securities, falling to a record low on Tuesday.

The shift towards safe-haven assets demonstrates a lack of trust in the stock market amidst the uncertainty of the Coronavirus. There are many that worry that this could be the beginning of the end of nearly a decade of strong growth worldwide. It is still far too early to tell if the world economy is actually entering a decline but providing that authorities, particularly in China, can contain and relieve the anxiety around the virus, stock markets should return to growth. However, if the virus is harder to contain than thought and it takes several more months to subdue, the damage may be too much for economies to overcome. Regardless of how the virus is to be handled going forward, it is nearly impossible to know that there is a recession until it is too late.

• This afternoon the 33^rd Dáil convened for the first time, with 48 newly elected and 112 returning TDs.
• No leader secured the required number of votes to become Taoiseach today, and there are differing arguments as to how long talks on the formation of a new government will last.
• Fianna Fáil TD Seán Ó Fearghaíl beat independent Denis Naughten and was re-elected as Ceann Comhairle, meaning Fianna Fáil’s seats are now on a level with those of Sinn Féin at 37.

Today the 33^rd Dáil convened with the agenda of electing the Ceann Comhairle and seeing through the Taoiseach nomination process, which entails a vote among all TDs on candidates put forward for Taoiseach.

None of the four leaders that were nominated to become Taoiseach – Mary Lou McDonald of Sinn Féin, Micheál Martin of Fianna Fáil, Leo Varadkar of Fine Gael or Eamon Ryan of the Green Party – conjured up the 80 votes required to win. This is due to the lack of success thus far in inter-party discussions to form a coalition or come to any sort of agreement on how the next government should look following the general election on February 8^th, which returned no clear majority. The results of the nomination process instead simply give an indication of the level of support for the main parties’ respective candidates among TDs.

Leo Varadkar received 36 votes in favour of his becoming Taoiseach, Micheál Martin received 41 votes, Mary Lou McDonald received 45 votes and Eamon Ryan received 12 votes. With none hitting the 80 vote threshold, the Dáil will now be suspended and Leo Varadkar will remain as a caretaker Taoiseach.

Sinn Féin’s Mary Lou McDonald benefitted from the support of 5 Solidarity People Before Profit TDs and a handful of left-leaning independents. The Social Democrats chose to abstain from voting for any candidate for Taoiseach, criticizing the process as a “popularity contest”, which is a dent to Mary Lou McDonald’s numbers as she would have been hoping to secure the support of all smaller left-leaning parties. However her party will surely be buoyed by today’s result as they enter into the coming negotiations, however long they may last.

In the election for Ceann Comhairle, Fianna Fáil TD Seán Ó Fearghaíl beat independent Denis Naughten and was re-elected, meaning Fianna Fáil’s seats are on a level with those of Sinn Féin at 37. Fianna Fáil TD Michael McGrath stated that he believes the loss of the seat will have little impact on their ability to play a key role in the formation of a government.

Fine Gael, with their 35 seats, appear intent on leading the opposition in the next government, with TD Richard Bruton suggesting that such an outcome would present an opportunity for the party to reflect on their weaknesses. TD Simon Harris reiterated his party’s position of ruling out any potential coalition with Sinn Féin, and stated that the impetus to form a government was on “the party that has won the most votes – Sinn Féin – and the party that won the most seats – Fianna Fáil.” Leo Varadkar, however, has not ruled out the prospect of his party forming an alliance with Fianna Fáil.

Micheál Martin believes that talks in relation to the formation of a new government could last up to two months, which has recent precedent given the 70 day wait for the formation of a new government in 2016. Fellow Fianna Fáil TD Michael McGrath is more optimistic and suggests it is more a matter of weeks. Fianna Fáil maintain that they have ruled out a coalition government with Sinn Féin. Sinn Féin, however, suggest they are open to negotiating with all parties.

Meetings between party leaders will intensify in the coming days as the Dáil is suspended and discussions on how to form a government begin in earnest. There remain numerous possibilities on the outcome of such talks. There may be a minority government made up of left-leaning parties led by Sinn Féin, a minority Fianna Fáil and Green Party coalition bolstered by a confidence-and-supply agreement with Fine Gael, or perhaps a Fianna Fáil and Fine Gael alliance. It’ll be a long road of debate and compromise and intra-party bickering. And if discussions end up fruitless, we may be headed for another general election.