On Thursday, Ecommerce giant Amazon delivered a disappointing quarter and outlook due to higher costs to run its warehouses and deliver packages to customers. After a long-running surge in sales during the COVID-19 pandemic, Amazon is facing a litany of challenges. The company’s expenses swelled as it offered higher pay to attract workers. A fulfillment center in New York City voted to create Amazon’s first U.S union, a result the on retailer is contesting and higher fuel prices are beginning to eat into consumers’ disposable income while making delivery more expensive for Amazon, the world’s biggest online retailer. Amazon’s forecast shows hiking the price of its fast-shipping club Prime last quarter may not
be enough to prop up its profit. The company expects to lose as much as $1 billion in operating income this quarter, or make as much as $3 billion. That’s down from an operating income of $7.7 billion in the same period last year.
“This was a tough quarter for Amazon with trends across every key area of the business heading in the wrong direction and a weak outlook for Q2,” said Insider Intelligence principal analyst Andrew Lipsman.
Regardless, there were still bright spots like Amazon Web Services, the division that new CEO Andy Jassy ran before taking the company’s top job last year. The unit increased revenue 37% to $18.4 billion, slightly ahead of analysts’ estimates. Jassy said the company has finally met its warehouse staffing and capacity needs, but it still has work to do in improving productivity. “This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020,” he said in a press
release.
Source: Reuters
