Online titan Amazon posted quarterly figures that showed both the agility of its response to demand during the coronavirus pandemic and the massive cost – in dollars and perhaps reputation – that accompanied that.

Amazon’s sales in the first quarter to March 31 climbed 26% to $75.5bn, beating guidance by $2bn. Amazon extended its technologically enabled bricks-and-mortar experiments with the opening of the first Amazon Go Grocery store in its home city of Seattle, and once again topped the online category of the American Customer Satisfaction Index – it has had a top 10 spot for more than a decade.

Bezos, Jeff

Jeff Bezos warned shareholders Amazon could spend $4bn on Covid-19-related expenses

But net income fell from $3.6bn to $2.5bn as factors such as higher shipping costs amid the Covid-19 crisis had an impact.

The retail juggernaut would, in what founder Jeff Bezos described as “normal circumstances”, be looking at operating profits of at least $4bn in its second quarter when sales could be up 28%. But these are highly unusual times and Bezos told shareholders they had better sit down because he had big news to pass on.

He continued: “We expect to spend the entirety of that $4bn, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe.

“This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own Covid-19 testing capabilities.”

The scale of coronavirus initiatives Amazon listed was impressive. The etailer has made “over 150 significant process changes” to its operations, including at Whole Foods Market stores, “to help teams stay healthy”.

It has hired an extra 175,000 people in fulfilment and delivery to handle higher demand during the health emergency.

“With disruptions to its warehouses, staff shortages and delivery delays, we believe Prime Day will not be as successful as in previous years and the company may decide to postpone”

Katie Cousins, Shore Capital

It has increased pay for hourly employees by $2 per hour in the USA and Canada, by £2 per hour in the UK and €2 per hour in “many European countries”.

It has acted on customers’ behalf by taking down more than 1 million third-party offers regarded as “price gouging” by profiteers during the pandemic and suspended more than 10,000 selling accounts globally for fair-pricing policy violations.

Amazon’s Web Services division is lending its expertise to the US government’s Covid-19 High-Performance Computing Consortium, “providing computing resources to advance research on diagnosis, treatment, and vaccines”.

Those are just a few of the measures Amazon is taking to play its part in helping the world beat the coronavirus challenge, in what Bezos described as “the hardest time we’ve ever faced” – a term that could be applied to society as much as to business.

‘Taken a beating’

But while such measures may be the right thing to do, as a corporate citizen as well as to trade successfully in such tough conditions, in Amazon’s case some believe that they are necessary from a reputational viewpoint alone.

Shoppers have carried on spending with Amazon throughout the emergency, and will no doubt continue to. But the etailer has also drawn condemnation for alleged shortfalls in warehouse health and safety, which critics have claimed shows it is prioritising its own success over employee wellbeing.

Shore Capital analyst Katie Cousins observes: “Questions around the safety and wellbeing of staff at Amazon’s facilities have been attracting headlines over the past couple of weeks, not an unfamiliar story with Amazon.”

Forrester Research retail analyst Sucharita Kodali told the BBC that the Amazon brand had “taken a beating”.

Higher costs, such as the coronavirus response measures, are taking a toll on Amazon. The great retail disruptor has been shaken up by the Covid-19 outbreak, though most retailers would be very happy to be able to report the sales and performance Amazon did in the first quarter.

But as Amazon adapts, it may face further disruption.

Cousins says: “We note that the company will usually have been expected to have started its preparations during Q2 for Amazon Prime Day, which is normally at the start of Q3 in July.

“However, with disruptions to its warehouses, staff shortages and delivery delays, we believe that event will not be as successful as in previous years and that the company may decide to postpone or make another [day] Prime Day when trading conditions improve.”

Prime Day has changed the face of retail globally, so any shift could have repercussions across the industry.

As Cousins concludes: “This is a very interesting time for Amazon. The strong increase in demand for its ecommerce services due to the coronavirus crisis could have shifted online participation well and truly to the right, and permanently as many offline outlets may not reopen. However, at what cost is Amazon prepared to capitalise on the demand?”

Analysis: Amazon sales rocket during coronavirus crisis, but at what cost?