Amazon.com Inc will spend $800 million in the current quarter to reduce delivery times for top customers to one day from two, trying to revive its main ecommercefranchise and ward off greater competition.
The announcement came after the online retailer on Thursday reported first-quarter profit that exceeded analysts’ estimates, demonstrating the company’s focus on cloud-computing, advertising, and other high-margin businesses continues to pay off.
Amazon chief financial officer Brian Olsavsky later put the attention back on Amazon Prime, the subscription programme that helped make the company the world’s largest online retailer. Amazon charges Prime customers monthly and annual fees — typically $119 in the US — in exchange for shipping discounts and access to music and video programming. It offers free two-day delivery on many items.
Shares Up The news bolstered Amazon’s shares, sending them up 1.9% to $1,938 in premarket trading Friday. At the same time, Target and Walmart fell 3% and 2%, respectively. Amazon’s ecommerce business saw unit sales grow 10% during the first three months of the year. That was the lowest ever. Total revenue increased 17%, the first year-overyear gain of less than 20% in a quarter since early 2015. Olsavsky said faster delivery times will increase the number and types of products customers are willing to buy from Amazon.
“We really think it’s going to be ground-breaking for Prime customers,” he said on a conference call after the results were released.
“We have the capability because we’ve been at this for more than 20 years.”
Olsavsky didn’t offer a timeline for the project’s roll out, which will begin in the US, saying “we expect to make steady progress quickly and through the year.” He also didn’t outline the extra ongoing costs Amazon will bear to take the programme global.
The announcement came after the online retailer on Thursday reported first-quarter profit that exceeded analysts’ estimates, demonstrating the company’s focus on cloud-computing, advertising, and other high-margin businesses continues to pay off.
Amazon chief financial officer Brian Olsavsky later put the attention back on Amazon Prime, the subscription programme that helped make the company the world’s largest online retailer. Amazon charges Prime customers monthly and annual fees — typically $119 in the US — in exchange for shipping discounts and access to music and video programming. It offers free two-day delivery on many items.
Shares Up The news bolstered Amazon’s shares, sending them up 1.9% to $1,938 in premarket trading Friday. At the same time, Target and Walmart fell 3% and 2%, respectively. Amazon’s ecommerce business saw unit sales grow 10% during the first three months of the year. That was the lowest ever. Total revenue increased 17%, the first year-overyear gain of less than 20% in a quarter since early 2015. Olsavsky said faster delivery times will increase the number and types of products customers are willing to buy from Amazon.
“We really think it’s going to be ground-breaking for Prime customers,” he said on a conference call after the results were released.
“We have the capability because we’ve been at this for more than 20 years.”
Olsavsky didn’t offer a timeline for the project’s roll out, which will begin in the US, saying “we expect to make steady progress quickly and through the year.” He also didn’t outline the extra ongoing costs Amazon will bear to take the programme global.
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