Amazon Profits Surge as Investment in Faster Shipping Pays Off
Amazon’s massive investment in faster shipping paid off for the tech company over the Christmas holidays with record sales and four times as many customers taking advantage of its free one-day shipping offer over the shopping season compared with last year.
Amazon is spending billions making one-day shipping the default for its Prime members and the gamble helped drive its revenues up over $87bn for the final quarter of 2019, or $29bn a month, compared with $72.4bn in the fourth quarter of 2018.
Profits increased to $3.3bn in the fourth quarter, up from $3bn in the same period last year, after a fall of 25% from July to September due to its costly shipping investments. Amazon’s shares shot up over 10% in after-hours trading.
“We’ve made Prime delivery faster – the number of items delivered to US customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” said Jeff Bezos, Amazon founder and CEO.
Amazon’s bumper Christmas – the best in its history – came as other retailers including Target, Macy’s and JC Penney have reported lower sales.
Amazon Web Services (AWS), its cloud computing business, reported revenues of $9.9bn for the quarter, up 34% from the year-ago period.
Amazon also gave an update on its number of Prime subscribers, who pay an annual fee for faster shipping and access to free content on its streaming media services. Bezos said the company now has over 150 million paid Prime members around the world, up from 100 million last April.
Amazon’s share price has lagged its tech giant peers in recent months as investors have worried about its spending. The latest results push the company back into the exclusive club of tech companies now valued at over $1tn including Apple, Alphabet and Microsoft.
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