Amazon's Profit More Than Double on 17% Rise in Sales
E-commerce company's quarterly revenue growth is lowest in nearly four years
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An Amazon fulfillment center in Orlando, Fla. PHOTO: PAUL HENNESSY/NURPHOTO/ZUMA PRESS
Analysis by Kevin Nguyen
by Yoree Koh
One of the biggest companies in e-commerce is Amazon. Amazon has many loyal customers and it shows as their profits reached $3.5 billion in quarterly profits. Amazon's profits are going to keep increasing because they are making investments within the company to improve the consumer experience. Amazon has estimated that their profits are going to increase in the second quarter because they are hoping to invest $800 million to make one-day free shipping the standard Prime members, instead of two days. For years Amazon has been putting every dollar made back into its business, and because of this Amazon has now entered a new era of more steady income that is consistently growing. Amazon is at the point where they rarely have to do anything and their profits will take off and in the higher profit margins. Amazon's profits reached record numbers last year as its newer businesses like its advertising and cloud computing businesses began to take off, this helped to counterbalance the lower margins of its established retail businesses. Amazon's current quarter has estimated revenue between $59.5 billion and $63.5 billion which was a 13% to a 20% growth from last year. Many have projected Amazon's revenue to be on average of $62.4 billion. Amazon predicts that they will earn $2.6 billion and $3.6 billion in operating income for the second quarter.
This article relates to marketing because Amazon is trying to cut costs to gain revenue, but at the same time they want to spend more money to create a better experience for their prime members. It amazes me how much money Amazon is willing to put down to receive a higher return on investment. I think Amazon's marketing strategy is brilliant! Amazon knows that pleasing their 100 plus million prime members will give them another reason to stay and keep their membership active. By putting at least $800 million down, Amazon is creating a pathway for billions and billions of dollars to be made. I chose this article because I am a prime member myself and the fact that Amazon is considering getting rid of two day free shipping is a blessing. If I need something as soon as possible, I don't have to wait two days for it anymore. I can finally get it in a day! I really love that Amazon is putting customer satisfaction first so they can retain their member's loyalty, it has definitely worked.
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