By ANNE D’INNOCENZIO and ALEXANDRA OLSON AP Retail Writers
Amazon has spent years honing the business of packing, shipping and delivering millions of products to doorsteps around the world.
Now it has a captive audience.
With much of the globe in various stages of a lockdown because of the coronavirus pandemic, the world’s largest online retailer has become a lifeline to many shoppers. But it is also grappling with delivery delays and mounting complaints from workers who worry about contagion while on the job.
The company’s website hit 2.54 billion visitors for the entire month of March, according to online research company Comscore. That marks a 65% jump from the same period last year. Amazon will report quarterly earnings on Thursday, providing a first glimpse into its financial performance during the pandemic.
Discounters like Walmart and Dollar General that sell essential products have seen their shares soar 8% and 15% respectively. But Amazon has been a standout, with its stock up 22% so far this year. That’s in contrast to the S&P, which has slid 11%. Amazon is also hiring 175,000 more workers at a time when many businesses have cut back and are seeking federal aid.
At the same time, Amazon’s vast empire is showing cracks. Deliveries that used to take just hours to arrive can instead take weeks or even months. High demand items like toilet paper and paper towels are frustratingly out of stock.
Probably the biggest issue facing the $1.1 trillion company is persistent complaints by warehouse workers of grueling hours of backbreaking work with little protection against catching the coronavirus. A growing number of infections has increased pressure on the company to take steps that could further slow down operations, including shutting down some of its warehouses and easing productivity quotas.
“Amazon has gone from a nice-to-have to a necessity,” said Jon Reily of Isobar, a global digital agency. “It’s becoming a public utility like the electric company or the water company. But they’re putting pressure on workers. And workers are scared.”
The most dramatic fallout came in France when a court ordered Amazon last week to stop delivering non-essential products for a month while it works out better worker safety measures. An appeals court upheld the ruling, although it expanded the number of products the company is allowed sell. Amazon responded by closing all its French warehouses, saying it is too complicated to separate out its activities.
Small groups of workers have staged walkouts at Amazon warehouses in New York, Chicago and Detroit, demanding that the facilities be closed for deep cleaning after workers there tested positive for the virus. Kentucky’s governor ordered a warehouse in Shepherdsville closed for several days last month after workers there got infected.
Amazon has refused to say how many workers have fallen ill. It says it has stepped up protection measures, ramping up cleaning, implementing temperature checks, racing to distribute masks, staggering shifts and spreading out tables in break rooms. It is also allowing any worker who feels unsafe to stay home without pay through April, while offering a $2 hourly pay bump for those who stay on the job.
Amazon also says it’s developing an internal lab that could potentially provide coronavirus tests for all employees, even those without symptoms.
It’s unclear how many of Amazon’s workers are staying home without pay or how many have been put into isolation because of contact with infected workers. But employees at some warehouses say absences are common.
Guiselle Diaz, 23, said she has not reported to her job at the Staten Island warehouse for weeks because she worries her asthma makes her vulnerable and she fears passing the virus to her 81-year-old grandmother, who lives with her.
“A lot of people are afraid, and a lot of people have conditions that stop them from going,” Diaz said.
Amazon’s competitors have faced similar challenges with delays, product scarcity and worker discontent. Walmart faced calls to step up safety measures after two workers from the same store contracted the virus and died. Some workers at grocery delivery services Instacart and Shipt, which is owned by Target, have walked off their jobs to demand greater safeguards against the virus.
Many shoppers have been forgiving of Amazon, in large part because there are few better alternatives for getting essentials online.
“That’s the only place you can shop for most everything you need,” said Marlina Fol, a caregiver in Manhattan, who said she was able to buy masks and hand sanitizer from Amazon in early March but now struggles to get a window for grocery delivery from Whole Foods, which Amazon acquired two years ago.
Amazon accounts for about 40% of online sales in the U.S., according to eMarketer, an online research firm. It has developed fierce loyalty among its more than 110 million U.S. Prime members, who pay $129 a year to get practically anything shipped to them in up to two days. That accounts for half of American households. Many experts believes Amazon is only picking up more subscribers during the pandemic and expect its dominance to grow further.
The company is also providing essential cash flow to third-party sellers who’ve seen their physical stores closed because of lockdowns. Aaron Krahling, whose vitamin store in Waldorf, Maryland, has been shuttered since mid-March, has been able to pay the rent for his business and other bills because of income he’s received from selling home accessories on Amazon.
“Everything would have come down to a screeching halt,” Krahling said. “It’s helped me cover all overhead without freaking out.”
Craig Johnson, president of retail consultancy Consumer Growth Partners, says Amazon has a “high class problem” considering how many other stores have gone dark.
“Given all that is going on, they have done remarkably well,” Johnson said. “Yes, there are glitches. But there are glitches all over. We have never been through this.”
GM looking to build 2nd US battery factory, Tennessee likely
General Motors says it’s looking for a site to build a second U.S. battery factory with joint venture partner LG Chem of Korea.
The companies hope to have a decision on a site in the first half of the year, spokesman Dan Flores said Thursday.
Flores would not say where the company is looking, but it’s likely to be near GM’s Spring Hill, Tennessee, factory complex, which is one of three sites the company has designated to build electric vehicles.
A joint venture between GM and LG Chem currently is building a $2 billion battery factory in Lordstown, Ohio, near Cleveland, that will employ about 1,000 people. The site is fairly close to GM’s two other designated electric vehicle plants, one in Detroit and the other north of the city in Orion Township, Michigan.
GM is likely to need far more battery capacity if it’s able to deliver on a goal of converting all of its new passenger vehicles from internal combustion engines to electricity by 2035.
LG Chem now has a battery cell plant in Holland, Michigan, that supplies power to the Chevrolet Bolt hatchback and the new Bolt electric SUV.
Industry analysts have said that automakers face a global shortage of batteries as the industry moves away from gasoline powered vehicles. Most of the world’s batteries are built in China and other countries.
The Wall Street Journal first reported that GM and LG Chem are pursuing a site in Tennessee to build a new battery plant.
GM’s venture is risky, at least based on U.S. electric vehicle sales. Last year full battery electric vehicles accounted for only 2% of the U.S. market of 14.6 million in new vehicle sales. But automakers are set to roll out 22 new electric models this year and are baking on wider consumer acceptance.
The consulting firm LMC Automotive predicts that U.S. battery powered vehicle sales will hit over 1 million per year starting in 2023, reaching over 4 million by 2030.
DETROIT (AP) — By TOM KRISHER
UK competition watchdog investigates Apple’s App Store
U.K. authorities have launched an investigation into Apple’s App Store over concerns it has a dominant role that stifles competition and hurts consumers.
The Competition and Markets Authority said Thursday it was looking into “suspected breaches of competition law” by Apple. The announcement adds to regulatory scrutiny of the iPhone maker’s app distribution platform, which is also the subject of three antitrust probes by the European Union’s executive Commission.
Apple said the App Store is “a safe and trusted place for customers” and a “great business opportunity for developers.”
The investigation was triggered in part by complaints from app developers that Apple will only let them distribute their apps to iPhone and iPad users through the App Store. The developers also complained that the company requires any purchases of apps, add-ons or upgrades to be made through its Apple Pay system, which charges up to 30% commission.
“Millions of us use apps every day to check the weather, play a game or order a takeaway,” Andrea Coscelli, the authority’s CEO, said in a statement. “So, complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice – potentially causing customers to lose out when buying and using apps – warrant careful scrutiny.”
The watchdog said it would consider whether Apple has a “dominant position” in app distribution for Apple devices in the U.K., and, if it does, whether the company “imposes unfair or anti-competitive terms on developers” that results in less choice or higher prices for consumers buying apps and extra.
Apple said it looked forward to explaining its App Store guidelines to the U.K. watchdog.
“We believe in thriving and competitive markets where any great idea can flourish,” the company said by email. “The App Store has been an engine of success for app developers, in part because of the rigorous standards we have in place — applied fairly and equally to all developers — to protect customers from malware and to prevent rampant data collection without their consent.”
By The Associated Press
UK extends job support, tax breaks for pandemic-hit economy
Britain’s treasury chief on Wednesday announced an additional 65 billion pounds ($91 billion) of support for an economy ravaged by the coronavirus pandemic, extending job support programs and temporary tax cuts to help workers and businesses in his annual budget.
Chancellor of the Exchequer Rishi Sunak told the House of Commons that it is too soon for the government to rein in spending, saying that his plans would “protect the jobs and livelihoods of the British people” through September as the government slowly lifts lockdown restrictions that have shut businesses across the U.K.
At the same time, he said Britain must be prepared to cut the deficit, announcing plans to increase the tax on corporate profits and boost revenue from personal income taxes in 2023.
“An important moment is upon us,” Sunak told the House of Commons. “A moment of challenge and of change. Of difficulties, yes, but of possibilities, too. This is a budget that meets that moment.”
U.K. public borrowing has risen to levels not seen since World War II as the government seeks to cushion the fallout from COVID-19, which has reduced gross domestic product by 10% and cost more than 700,000 people their jobs. Projections released Wednesday by the Office for Budget Responsibility show that the economy will still be 3% smaller five years from now than it would have been without the pandemic.
Sunak said government support programs have succeeded in mitigating the impact. The unemployment rate is now expected to peak at about 6.5%, rather than the 11.9% forecast last July, he said, citing estimates from the Office for Budget Responsibility. The economy is forecast to grow 4% this year and 7.3% in 2022.
On Wednesday, Sunak announced plans to extend those support programs for six months. They include a furlough program, under which the government pays 80% of the wages for private employees unable to work during the pandemic, as well as grants for self-employed workers, a temporary increase in welfare payments and tax relief for businesses.
Sunak cheered business leaders by offering a tax credit of up to 130% of the money companies invest in expanding and improving their operations. Sunak said the credit is expected to increase investment by 10% or 25 billion pounds over the next two years, creating jobs and boosting economic growth.
Stephen Phipson, chief executive of Make UK, described the policy as bold.
“Manufacturers have strong intentions to invest in capital equipment as well as digital and green technologies which are crucial for our long-term recovery,” he said. “Today’s announcement should help turbocharge investment to ensure that those plans turn into reality in the short-term.”
Looking to the future, Sunak said the government will in 2023 increase corporation tax to 25%, from the current rate of 19%, and freeze personal income tax thresholds, which will increase revenue as inflation boosts incomes.
But opposition leader Keir Starmer accused Sunak of failing to address deep-seated economic problems and banking on a “consumer spending blitz” to bail out the economy.
Starmer said the budget fails millions of key workers who are having their pay frozen, businesses swamped by debt, and families paying higher local property taxes.
“The central problem in our economy is a deep-rooted insecurity and inequality, and this budget isn’t the answer to that,” Starmer said. “So rather than the big, transformative budget that we needed, this budget simply papers over the cracks.”
Ian Blackford, the Scottish National Party’s leader in Parliament, criticized Sunak for continuing a strategy of temporary support that leaves businesses and consumers unsure of the future.
The budget leaves Scottish voters with a clear choice as the SNP campaigns to hold a second referendum on independence from the U.K., Blackford said.
“For the people of Scotland, this budget comes at a critical moment of choice,” he said, echoing Sunak’s language. “Post-Brexit and post-pandemic, Scotland now has a choice of two futures: The long-term damage of Brexit and more Tory austerity cuts, or the opportunity to protect her place in Europe and to build a strong, fair and green recovery with independence.”
LONDON (AP) — By DANICA KIRKA
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