Amazon will spend billions of dollars to offset holiday shipping slowdown
It's due in large part to global supply chain issues.
While Amazon had a huge revenue surge over the past year thanks to lockdown and the resulting rise of online shopping, the company’s recent earnings report shows that it might be slowing. Net sales increased 15 percent to $110.8 billion in the third quarter, which is a step down from the previous quarter’s 27 percent growth rate.
At the same time, Amazon also warns that global supply chain issues, labor shortages and increased shipping costs could incur “several billion dollars of additional costs” in the next quarter. Amazon shares dropped 3.8 percent in extended trading as a result.
Amazon CEO Andy Jassy said that the company wanted to minimize the impact of these issues on the customers and selling partners this holiday season. “It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners,” he said in a press release. This also marks Jassy’s first quarter as Amazon’s CEO since Jeff Bezos stepped down earlier this year.
Of course, Amazon is still making a lot of money; it’s the fourth consecutive quarter it has earned over $100 billion. Even if online sales have dipped, Amazon Web Services continues to be a huge money maker for the company, with a 39 percent revenue increase to $16.1 billion.
