Through last year and the beginning of this one, many emerging consumer companies were finding it more and more difficult to reach their once-optimistic sales and profitability projections. Much of this was due to surging digital marketing costs; by some accounts, the cost of Instagram and Facebook ads doubled year over year in 2019. This created unprecedented pressure for businesses relying on digital marketing to build brand awareness and acquire customers. Enter COVID-19. Now, emerging businesses must also contend with a pandemic that has triggered painful human and economic loss. However, in another example of how the virus has flipped previous social and economic dynamics on their head, digital marketing costs have plummeted in recent weeks. Why has this happened? And what does this mean for emerging businesses?
The reasons for the recent volatility in the price of digital ads boil down to, as usual, supply and demand. On the supply side, stay-at-home orders are resulting in people spending more time online and exposing themselves to more potential marketing opportunities. Marketing-impressions inventory is through the roof. On the demand side, almost all sectors of the economy are currently scrambling to preserve cash, including by cutting marketing budgets. For example, Airbnb reported last month that it would temporarily cut all marketing, and Expedia Chairman Barry Diller told CNBC that the company would reduce advertising by 80%. Understandably, most companies in travel, hospitality, events, brick and mortar retail, and those who advertise heavily around professional sports have all slashed marketing.
The result is that digital ad prices measured on a cost-per-impression (CPM) basis have dropped substantially. Marketing costs vary widely across platforms and outlets, but a number of reports frame the recent decline in a range from 20% to as much as 65%. At the high end of the range, this means CPM has returned to, or even dropped below, where it was before the spike in digital marketing costs in 2019.
But will emerging consumer companies be able to take advantage of this? The answer depends largely on two factors. First is consumers’ propensity to actually click through and make purchases when they are exposed to ads. As the economy enters recession and unemployment swells, many consumers will become pickier and less receptive to ads. CPM might crater, but if consumers become too thrifty, costs-per-click (CPC), and ultimately costs to acquire customers (CAC) may not fall by as much. Here, the early evidence is mixed as certain companies and marketers have claimed to see lower CAC, while others are reporting that lower CPM has been roughly offset by a more skittish consumer and lower conversion rates.
The second factor is whether these emerging businesses have the cash and the confidence to keep marketing in the face of today’s challenges. Here, key factors include how well capitalized the business in question is, and what kind of product they are selling. As in good times, stronger balance sheets empower companies to invest and take strategic risks. On the product front, the more a business expects its merchandise to resonate with consumers coping with the pandemic, the more emboldened they will be to advertise – a company that makes facemasks is more likely to invest in marketing today than a hotel chain. A final factor that could impact which emerging businesses attempt to take advantage of lower marketing costs is how they think about the timing of their return on investment. A well-capitalized company looking to build its brand could look at today’s depressed CPM costs and see an opportunity to create brand awareness on the cheap, sowing the seeds for a larger following and stronger return when the economy eventually improves.
Ultimately, lower prices for digital ads may only present a temporary reprieve for marketing-driven businesses. Google and Facebook are likely to emerge from the recession with even stronger market share as smaller competing advertisers and publishers struggle. This means that when the recession is over, digital marketing costs could not only return to where they were, but go even higher.
Still, these businesses will gladly take that reprieve. No matter how long it lasts, perhaps some companies can use this time to acquire more customers (or at least build more brand awareness), and simultaneously reshape their business models to rely less on digital marketing. Such a nearly paradoxical threading of the needle could be difficult to execute, but it may be an opportunity that wasn’t even an option two months ago. In many cases, it may be the only choice.
Headlines of the Week
J.C. Penney is in “advanced talks” with existing lenders for a loan to fund it through a potential bankruptcy, The Wall Street Journal reported citing anonymous sources. The retailer could file for bankruptcy “in the next few weeks,” the Journal reported. Last week, Penney skipped a $12 million interest payment, putting it into a 30-day grace period. However, as the Journal noted, the company could enter a forbearance agreement with lenders. Penney’s bankruptcy financing package could total $800 million to $1 billion, some of which could include existing debt, according to the Journal.
Gap Inc warned on Thursday it may not survive the next 12 months intact and would need to borrow more funds in the face of widespread coronavirus shutdowns that have crippled the business of clothing retailers globally. The apparel retailer also said it had suspended rent payments for shuttered stores, and was in talks with landlords to defer payments, change lease agreements, or in some cases terminate the leases and permanently close some stores. Gap said the suspended rents in North America would have amounted to about $115 million per month. Like many in corporate America, Gap has already withdrawn its full-year targets, suspended its dividend, furloughed employees and drawn down its existing credit lines. The retailer, which owns Banana Republic and Old Navy, said it expects to have $750-$850 million of cash and cash equivalents, inclusive of short-term investments, at the end of the fiscal quarter ending May 2. In order to have sufficient liquidity for the next 12 months, the company said it would need to tap the debt market, cut jobs, defer capital expenditures and cut back on orders from vendors.
Apparel & Footwear
VF Corporation announced today that it has priced its previously announced offering of senior notes. The offering consists of four tranches. $1 billion aggregate principal amount of unsecured senior notes due 2022 with a coupon of 2.050%, $750 million aggregate principal amount of unsecured senior notes due 2025 with a coupon of 2.400%, $500 million aggregate principal amount of unsecured senior notes due 2027 with a coupon of 2.800% and $750 million aggregate principal amount of unsecured senior notes due 2030 with a coupon of 2.950%. The Company intends to use the net proceeds from the debt offering to repay the borrowings under its senior unsecured revolving credit facility. The Company intends to use any remaining net proceeds for general corporate purposes.
UGG’s rather litigious parent company Deckers Outdoor Corp. is suing the similarly lawsuit-happy Steve Madden on the basis that its fellow footwear company hijacked one of its protected designs. According to the complaint that Deckers filed in a California federal court on Tuesday, Steve Madden is on the hook for trade dress infringement, unfair competition, and design patent infringement in connection with its manufacture and sale of a fluffy, slingback slipper, one that Deckers claims looks a bit too much like one that its’ UGG brand has sold – and heavily promoted – in recent years. In its newly-filed complaint, Goleta, California-based Deckers asserts that “competitor” Steve Madden has actively sold a lookalike pair of “Fuzz” slippers “in an effort to exploit Deckers’ goodwill and the reputation of [UGG’s Fluff Yeah shoe].”
The Laura Ashley brand has been saved after its administrators agreed to a sale to Gordon Brothers. The fashion and homeware store went bust last month after it failed to raise emergency cash from its owners, becoming the first household name to fall victim to the coronavirus lockdown. Gordon Brothers is a restructuring and investment company that focuses on global expansion and building brands’ online presence. It has bought the global Laura Ashley brand and is understood to be looking at taking on some of the 150 shops that have shut. But PwC, which is handling the administration, is still looking for a buyer for Laura Ashley’s UK operations – its shops, online business and distribution network, and manufacturing operations. Laura Ashley has grown into a globally recognised brand since it was founded in 1953 by the eponymous fashion designer and her husband Bernard.
Boohoo has said it is ready and able to buy up ailing brands after reporting better than expected trading. The online fashion specialist, which has been flagged as a potential buyer for the Oasis and Warehouse chains that collapsed into administration last week, reported a 54% rise in pre-tax profits to £92m as sales increased 44% to £1.2bn in the year to 29 February. The group – which owns PrettyLittleThing, Nasty Gal, Coast, Karen Millen and MissPap as well as the main Boohoo site – said sales had taken a hit after the government imposed restrictions on movement on 23 March, but had bounced back to better than last year’s levels in recent weeks. Boohoo said it could not provide profit guidance for the year ahead because of uncertainty around the coronavirus pandemic, which might result in the closure of its warehouses at some point. But the company said it had a strong balance sheet, with £241m of cash at year end and was “well-placed to … continue to disrupt fashion markets around the world”.
Athletic & Sporting Goods
Shoe giant Foot Locker is the latest retailer to furlough its employees over coronavirus-related store closures. The “majority of the Company’s store employees in the United States and Canada” will be affected, according to paperwork filed with the Securities and Exchange Commission. Additionally, the furlough will extend to store employees in Australia and supply chain employees in the U.S. The furlough will begin April 26 – a full week after large companies such as Disney, Best Buy, Ikea and CarMax began companywide furloughs.
Boston-based footwear brand New Balance has landed a $1.5 million USD win in a lawsuit over its “N” trademark in China. The Pudong New Area People’s Court in Shanghai declared Chinese athletics company New Barlun engaged in “unfair competition,” with the ruling noting that the “N” logo on New Barlun’s shoes “could cause customers to be confused” in terms of their relation to New Balance. The court ultimately issued an injunction to halt further unfair competition from New Barlun, awarding ¥10 million CNY (~$1.41 million USD) in damages and another ¥800,000 CNY (~$110,000 USD) for lawsuit costs.
Sports betting platform DraftKings surged as much as 18% as investors got their first chance to buy and sell shares. The market debut didn’t involve a traditional method, as DraftKing’s merger with a special-purpose acquisition company allows it to go public without an initial public offering or direct listing. The company’s first day of trading arrived at a pivotal moment for the global sports industry. The coronavirus pandemic has frozen nearly all leagues and events, barring some esports tournaments and a charity golf match between Tiger Woods, Phil Mickelson, Tom Brady, and Peyton Manning.
Cosmetics & Pharmacy
Speed and agility might be two of the key survival skills during the COVID-19 retail shutdown — but they also might not be enough if they’re not backed up by a big financial cushion. Count Macy’s Inc. as among the retailers still hustling, pushing hard to secure a reported $5 billion financing package to hold it over. And while the company is moving fast, it also appears to have moved early, putting its Bluemercury business on the block weeks ago, according to three sources. The department store started shopping the 171-door beauty concept with the help of Goldman Sachs shortly before the outbreak closed retail in mid-March. Private equity firms were among the players to take a look at the chain. While it’s not known exactly why Macy’s decided to take Bluemercury to market, the threat of the coronavirus was in the air and sources said the sale process continued after stores closed.
Clean beauty sales are continuing their upward trend, in spite of both the coronavirus pandemic and its following economic downturn. According to NPD, Prestige clean beauty is up 11 percent this year despite beauty’s 14 percent decline. “Clean beauty is about safety. And today, there is nothing people are more concerned about than safety,” said Larissa Jensen, NPD’s vice president and beauty industry adviser. Brands showing a commitment to product safety, as well as an adherence to the principles of “clean” beauty (no toxins or unsafe synthetics) are reporting optimistic sales outlooks. One of the earlier pioneers of the movement, Beautycounter, sees the shift as part of a long-trending rise, only accentuated by the pandemic.
Discounters & Department Stores
Target says it’s gaining market share, but shedding profits as shoppers shift from stores to online buying, the retailer announced Thursday in a business update. The company’s digital sales are up 100% year-over-year since the beginning of February, with April online sales so far increasing more than 275%. Store comparable sales have decreased in the mid-teens in April following a rush to stores in March. Overall, Target’s comparable-store sales have increased 7% since the beginning of February, and the company expects operating margin to drop by more than 5% in the first quarter. Target also announced Thursday it’s extending its $2-an-hour wage increase for employees until May 30. It will also extend its back-up childcare benefits and its 30-day paid leave benefit, which applies to workers 65 or older, pregnant or those with underlying medical conditions, through the end of May.
Lord & Taylor is exploring a bankruptcy filing, Reuters reports, citing unnamed sources. “The company is working through various options at this time and is declining to comment,” a spokesperson from parent company Le Tote said in a statement emailed to Retail Dive. Those options include attempting to get relief from creditors and seeking financing, sources told Reuters.
Macy’s is taking extreme measures to avoid dire outcomes like bankruptcy, and will try to raise billions in debt to weather the pandemic crisis, according to people familiar with the matter. The country’s largest department store is looking at raising as much as $5 billion in debt, the people said. It will seek to use its inventory as collateral to raise $3 billion and real estate to raise $1 billion to $2 billion, they said. It is not planning to pledge its prime Herald Square location in New York as part of the deal, one of the people said.
Emerging Consumer Companies
Quip, the New York-based oral care business, has been forced to respond to difficulties in the early part of the year by laying off 17 employees, about 10% of Quip’s staff. In its quest to become a full-service oral care company with products spanning a brushes, paste, a tongue scraper, gum, mouthwash, a reusable water bottle, compostable packaging, a smart toothbrush that tracked brushing habits on an app, and a service akin to dental insurance, Quip has seen some products struggle to find adoption.
Casper, the six-year-old New York-based mattress company, laid off 78 employees from the corporate team, representing 21% of its total corporate workforce. This follows news on March 30 that the brand furloughed all 500 of its retail employees at its 62 brick-and-mortar stores. Casper is also winding down its European operations and its 31-person headquarters in Germany. The company announced that Greg Macfarlane, Casper’s CFO and COO, will depart the company in May.
Luxury Promise, a London-based marketplace for the resale of luxury handbags and accessories, raised $3.75m in Series A funding. The round was led by Beringea with participation from existing investor Lloyd Amsdon, co-founder of Watchfinder, the platform for pre-owned premium watches acquired by Richemont in 2018. The platform enables consumers to shop for pre-owned luxury goods, with a focus on handbags. In addition to paying sellers cash up front for their items, the marketplace goes through a quality and authentication process, providing in-house expert repairs and finishing to pre-owned goods where needed.
Grocery & Restaurants
Laird Superfood closed a $10 million financing round funded entirely by Danone Manifest Ventures, the venture arm of Paris-based Danone SA. The company will use the funds to expand its plant-based product platform and grow its manufacturing campus in Sisters, Ore. Launched in 2015, Laird Superfood offers creamers made with mushrooms and other functional ingredients, along with coffee, coconut water and coconut sugar.
The National Restaurant Association has released a comprehensive COVID-19 reopening guide for the industry to ensure a safe and secure environment for employees and guests. The 10-page guide, created with input from the FDA, Centers for Disease Control and Prevention and Environmental Protection Agency, lists a variety of recommendations such as sanitizing tabletops between seatings, discarding single-use items like paper menus and installing sneeze guards along buffet bars. The association, which says the industry is poised to lose $80 billion by the end of the month, said the guidance builds on already established best practices restaurants have put in place since the spread of COVID-19.
Kroger is taking the lead in offering guidance to retailers, restaurants, logistics and distribution centers and other industries to consider as they start to consider re-opening their facilities. With its stores open throughout the pandemic, the nation’s largest supermarket retailer drew on its own experiences to develop a guide, Sharing What We’ve Learned: A Blueprint for Businesses, that contains best practices, suggested protocols and creative assets, including social distancing signage, to help businesses begin to reopen safely “and in sync with their respective state plans.” Kroger’s Blueprint includes actionable recommendations and learnings that the company has applied in the last six weeks to safeguard its employees, customers, and communities, as well as what it has learned through regular interaction with business leaders in other countries, including Italy, Singapore and China – all of which were ahead of the U.S. in terms of the pandemic cycling through their countries. Late last week, several U.S. Governors and business organizations asked Kroger to help their state’s businesses to reopen safely. Kroger said it developed the Blueprint –in 36 hours to begin providing immediate assistance to states and businesses with plans to update with new learnings in real-time.
The Cheesecake Factory Inc. has closed on a $200 million investment from affiliates of private-equity firm Roark Capital, the companies announced. The Calabasas Hills, Calif.-based Cheesecake Factory will expand its board from eight to nine directors. Paul Ginsberg, president of Roark, will take the new seat as an independent director, the companies said. “This transaction not only meaningfully enhances our liquidity position to navigate the near-term COVID-19 landscape and get our affected staff members back to work as soon as practicable,” said David Overton, Cheesecake Factory CEO and chairman, in a statement, “but also importantly, solidifies our ability to manage the business for the long-term for all of our stakeholders once we emerge on the other side of this crisis.”
Home & Road
Sleep Number said net sales increased 11% in the first quarter ended March 28. The net sales increase included a 7% comparable sales gain and 5 percentage points of growth from new stores. The gross profit rate increased 240 basis points to 63.9% of net sales. Operating income increased 61% to $53 million, or 11.2% of net sales, up 350 basis points vs. the prior year’s first quarter while investing in growth drivers, including 25% higher year-over-year R&D spending, officials said. Earnings per diluted share increased 70% to a record $1.36, while absorbing 11 cents of year-over-year income tax rate headwind.
Home furnishings e-commerce company One Kings Lane confirmed an affiliate of CSC Generation has acquired the business from Bed, Bath & Beyond. CSC is a multi-brand technology platform and holding company and owner of Merrillville, Ind.-based DirectBuy and Z Gallerie, which have become the base for its home furnishings business. Bed Bath & Beyond CEO Mark Tritton announced the sale during an earnings conference call last week but did not disclose the price or the buyer. CSC Generation CEO Justin Yoshimura could not be reached immediately for comment, but he previously told Furniture Today the company is in growth mode and in the market for additional home-furnishings-related acquisitions. Earlier this month, Bloomberg reported CSC was bidding on the assets of bankrupt Pier 1 Imports in a move that could shrink Pier 1’s physical footprint down to less than 100 stores. Yoshimura declined to comment on the report.
Vertically integrated furniture manufacturer and retailer Ethan Allen Interiors predicted sales of $150 million for its 2020 fiscal third quarter ended March 31 in an update on business conditions. That would represent a 14.5% decrease compared with the same period last year. Ethan Allen will release fiscal third-quarter financial and operating results after the market closes on Monday, May 11. Ethan Allen will begin reopening Ethan Allen Design Centers May 1 in some states and has begun increasing manufacturing operations. It has been more than five weeks since Ethan Allen temporarily closed its company-owned retail design centers and some of its manufacturing operations. Its COVID-19 response included furloughing around 70% of its global work force, with Ethan Allen CEO Farooq Kathwari temporarily forgoing his salary and pay cuts for other salaried positions.
Online selling is the only bright spot in the increasingly grim retail sales data coming out this month, and online home furnishings sales are faring well, according to multiple reports. Bed Bath & Beyond, which is in the process of transforming itself and has been criticized in the past for its poor e-commerce execution, has ramped up its fulfillment network by converting darkened stores into regional fulfillment centers. Its digital sales were up 16% in March, and CEO Mark Tritton told analysts last week that the company has sold a lot more bread makers and vacuum cleaners than it did at this time last year. Wayfair has likewise noted that its sales have doubled since the crisis started, and 7Park Data, a data analytics company, observed 33% and 70% growth the past two weeks, significantly above the prior run-rate. Target’s e-commerce growth is up 156% during the past three weeks, with the week of April 4 up nearly 220%.
Jewelry & Luxury
Dominion Diamond Mines, which owns the Ekati mine in Canada’s Northwest Territories as well as 40% of the Diavik mine, has filed for insolvency protection under the Companies’ Creditors Arrangement Act (CCAA). The company has obtained a proposal for debtor-in-possession financing from current owner Washington Companies. Washington has also made a stalking-horse bid that would involve a renegotiation of its current capital structure with creditors. That bid would require the company to solicit other bidders either to acquire its assets or a stake in the company.
In the latest blow to the ailing Baselworld fair, LVMH—parent company of the TAG Heuer, Hublot, and Zenith watch brands as well as Bulgari—has also decided to leave the annual event, casting further doubt on the show’s future. Last week, a group of prestigious watch brands—including Rolex, Patek Philippe, Chanel, and Chopard—announced they were leaving the century-old show to start a new watch event in Geneva in April 2021.
Anglo American Plc will mine significantly fewer diamonds this year than it previously planned to, as the biggest supplier of the gems contends with a complete shutdown of the global supply chain. The coronavirus pandemic has crippled the diamond trade. India’s cutting industry, which handles almost all of the world’s stones, has come to a halt. At the same time, diamond purchases in the key U.S. market have tumbled as retailers closed stores. Botswana, where Anglo’s De Beers unit sells its stones, has also blocked travelers from the key diamond-buying centers.
The fine jewelry industry was put on high alarm earlier this week when Bank of America released a new gold forecast, predicting the metal could surpass $3,000 an ounce over the next 18 months. The quickly escalating price of gold — which stood around $1,400 at the beginning of the year — is tied to global and political uncertainties, plummeting oil prices and massive cash injections from governments looking to stave off the economic impact of the pandemic. On Thursday, the safe haven metal’s price stood at more than $1,700.
Office & Leisure
Spin Master Corp. said it won a record damages award against a Chinese company that was making unauthorized copies of its Bakugan children’s toys. The Suzhou Intermediate Peoples’ Court awarded 15.5 million renminbi ($2.2 million), which the company’s lawyers believe is the most ever given to a foreign patent owner in a Chinese court case. “Patent cases haven’t been producing very big awards,” in China, said Spin Master’s lawyer, Doug Clark, who works for the Rouse law firm in Hong Kong. “There is a willingness of the courts to take a broader view of damages.” Last year, Spin Master won a suit against another Chinese company that was selling Bakugan knock-offs in the Asian nation, but with a lower damage amount. And it’s not just Bakugan. After local prosecutors declined to act, Spin Master successfully filed a private criminal action against another firm that was selling counterfeits of its Hatchimals on Alibaba and other e-commerce sites. Three people were sentenced to three years in prison and the companies were fined, according to the lawyers.
Coronavirus (COVID-19) is taking a toll on the famously recession-resistant pet segment. That is the message from Packaged Facts, which reported that total U.S. retail sales of pet products and services will decline by 17% in 2020, compared with the 5% growth anticipated prior to the coronavirus pandemic. This equates to a drop from $95.0 billion in 2019 sales to $78.5 billion in 2020, according to Packaged Facts. “Historically the pet care business has been quite been an impressive and consistent grower, growing twice the rate of GDP and even growing in the great recession,” Simeon Hyman, global investment strategist at financial services firm ProShares, told Chain Store Age. “It does appear that this time is a little different.” However, there is a glimmer of hope for retailers carrying non-discretionary pet products, primarily pet food and cat litter. Pet food, the largest pet industry category, is forecast to grow 4% in 2020, compared with a 6% growth forecast before the COVID-19 pandemic impact, according to Packaged Facts.
It’s not just all fun and games for Hasbro these days. The Pawtucket-based toymaker announced Tuesday that a factory in East Longmeadow, Massachusetts, is being converted to manufacture personal protective equipment for front-line medical workers to use during the coronavirus pandemic. The plant usually makes Play-Doh and board games. Hasbro spokesperson Julie Duffy told WPRI 12 the factory will be able to make 50,000 face shields a week over the next several weeks. The gear will be donated to hospitals in Rhode Island and Massachusetts, she said.
Game Stop Corp. is instituting pay cuts amid the COVID-19 pandemic. It’s also looking to open stores in select markets. The videogame retailer said it has begun the process of re-opening stores in Italy, Germany, Austria and the states of South Carolina and Georgia and is preparing for the potential to re-open in other operating countries and states in the coming weeks. (GameStop, which operates approximately 5,500 stores across 14 countries, said a third of its U.S. stores remained closed but that two-thirds were open with curbside pickup service.) GameStop also said that CEO George Sherman will take a temporary base salary reduction of 50% and that CFO Jim Bell and the remainder of the executive leadership team will take a 30% reduction. Beginning April 26, certain other employees across the company’s worldwide operating units will receive temporarily reduced pay of between 10% and 30%. Due to the impact of governmental regulations and certain landlord decisions to close properties, the company did not make a portion of certain lease payments and remains in discussions with its landlords regarding ongoing rent payments, including potential abatement, deferral and or restructuring of future rents during this period of COVID-19 related closure.
Technology & Internet
Amazon employees used data on independent sellers on its platform to launch competing products, according to a Thursday report by The Wall Street Journal. The practice conflicts with statements by the e-commerce giant that it doesn’t use information collected from third-party sellers when developing its own products, the Journal said. The information collected by Amazon can reportedly help the company determine pricing, which features to replicate or whether to get involved in a product category. The Journal said it spoke with more than 20 former employees of the company’s private-label business and accessed documents outlining the practice.
Facebook Inc.’s $5.7 billion investment in a unit of India’s Reliance Industries Ltd. creates an ecommerce leviathan to take on Amazon.com Inc. and Walmart Inc. in one of the world’s most competitive internet arenas. The deal twins WhatsApp with Reliance’s nearly 400 million internet users—much of that added in just a couple of years—and nationwide store and logistics network. Facebook’s biggest investment since its takeover of WhatsApp could empower a new combatant in an ecommerce war already raging between Amazon and Walmart’s Flipkart. India, the last big global retail frontier with 1.3 billion people, is an open arena for technology giants as smartphone adoption balloons and cut-rate data plans fuel consumer entertainment and social media.
Google will make product listings on its Shopping service free, part of a broader push to expand in e-commerce and mount a bigger challenge to Amazon.com Inc. as the COVID-19 pandemic drives more consumers online. The Alphabet Inc. unit will let merchants post their wares on Google Shopping for free regardless of whether they pay for Google ads. Before, these listings were all sponsored, meaning merchants paid Google every time someone clicked through to their website from a Google product listing. The move may reduce advertising revenue initially, but it could also entice more merchants to use Google Shopping in the long term. The company turned the service into a paid product in 2012 and it grew into a huge business, generating billions of dollars in highly profitable revenue each quarter.
Amazon.com Inc., No. 1 in the 2020 Digital Commerce 360 Top 1000, lost its fight to be able to sell nonessential items in France after failing to convince judges it had taken measures to protect workers from the coronavirus. The Versailles appeals court said in a Friday ruling that Amazon should restrict deliveries to mostly foodstuffs, health items and computer products. Amazon has said that last week’s order from a lower court to sell only essential food, hygiene and health products was too ambiguous and temporarily stopped all orders. “The lower court judges have to be backed when they firmly remind Amazon of its responsibility in preserving the health of its employees in the current sanitary crisis when the COVID-19 is highly contagious,” the Versailles judges said. France is Amazon’s third-biggest market in Europe.
Finance & Economy
U.S. consumer sentiment fell for a third straight month as people weigh the coronavirus pandemic and the possibility of an economic re-opening, data released by the University of Michigan showed. That decline comes after a sharp drop in current economic conditions. The coronavirus pandemic has led to more than 26 million job losses over the past five weeks. That’s more than the employment gains since the Great Recession. Those sharp job losses have sparked some calls for re-opening the economy and easing stay-at-home regulations imposed to curb the virus spread.
President Donald Trump signed a $484 billion coronavirus relief package into law as Washington plans the next steps in its unprecedented attempt to rescue an economy and health-care system bludgeoned by the pandemic. The measure puts $370 billion into aid for small businesses trying to keep employees on the payroll as they temporarily shutter to try to slow Covid-19′s spread. It grants $75 billion to hospitals struggling to cover costs during the crisis, and $25 billion for efforts to ramp up testing for the disease. The package becomes the fourth passed by Congress to respond to the outbreak, with a total cost approaching $3 trillion.