Amazon (NASDAQ:AMZN) and Lyft (NASDAQ:LYFT) have joined forces to support each other during this COVID-19 crisis. Authorities have locked down cities and people are staying home to curb the spread of the coronavirus. As a result, the demand for online shopping has increased. In contrast, the use of ride-hailing services has declined. Lyft has lost business, while Amazon has more business than it can handle.
Amazon has recruited Lyft drivers for various roles to address its labor shortage. Lyft drivers can join Amazon’s warehouse or delivery teams. As the demand for online shopping rose, Amazon needed to hire 100,000 more workers for warehouse and delivery jobs.
The partnership will help the companies cope with the COVID-19 pandemic. For example, the partnership gives Amazon immediate access to a massive pool of potential workers. The company can fulfill orders quickly, avoid customer complaints, and make more sales. Teaming up with Amazon helps keep Lyft drivers busy during the slump in the ride-hailing business.
The retail business contributes to most of Amazon’s revenue. Therefore, the company wants to make the most of the COVID-19 crisis and the surge in online shopping.
As Walmart (NYSE:WMT) and other traditional retailers also compete for online business, teaming up with Lyft could help Amazon defend its market share. Currently, Amazon dominates the US e-commerce space with a 38% market share. However, Walmart is fighting hard to slash Amazon’s e-commerce lead. Walmart also sees the COVID-19 pandemic as an opportunity to increase its online retail sales.
Amazon and Lyft stocks
Lately, there has been more interest in Amazon stock. Investors realized that the company could gain big from the COVID-19 outbreak.
In addition to online shopping, Amazon provides other services during this crisis. For example, the company provides online video streaming and cloud computing services. As Netflix (NASDAQ:NFLX) has shown, the demand for video streaming has spiked since the coronavirus keeps more people indoors. For Microsoft, the COVID-19 pandemic drives the demand for cloud services.
Amazon stock rose 3.5% in March, while Lyft stock fell about 30% during the same period. Investors’ appetite for Lyft stock has declined. The company faces headwinds in its ride business.
The new partnership could cement the relationship between the companies. Notably, Lyft is one of Amazon’s cloud customers.