Amazon has reported slowing sales growth and a net loss after a second quarter in which it continued to use technology to innovate and automate in areas from virtual and in-store technology, to robotics in its warehouses and autonomous delivery.
The retailer and technology company, ranked Elite in RXUK Top500 research, says it’s focusing on productivity, especially in fulfilment, as inflation continues to bite in areas from fuel to transport. It says more shoppers are buying as it adds more features to Amazon Prime. In the UK, however, the cost of Prime membership is set to rise by just over 20% to £95.
Amazon this week reports net sales of $121.2bn (£100.4bn) in the second quarter of its financial year, to June 30 2022. That’s 7% up on the same period in 2021. It reported operating income of $3.3bn (£2.7bn), down from $7.7bn (£6.4bn) a year earlier. But at the bottom line it reported a net loss of £2bn (£1.7bn), down from a net profit of $7.8bn (£6.5bn) last time, after writing down the value of its investment in electric vehicle maker Rivian Automotive.
In the first half of the year, it reported net sales of $237.7bn (£196.9bn), up from $221.6bn (£183.6bn) a year earlier, operating income of $6.99bn (£5.8bn), down from $16.6bn (£13.7bn) last time, and a net loss of $5.9bn (£4.9bn), from net income of $15.9bn (£13.2bn) last time.
Looking ahead, Amazon expects net sales to be between $125bn (£103.6bn) and $130bn (£107.7bn) in its third quarter – between 13% and 17% up on the previous year. Operating income is expected to fall to between $0 and $3.5bn (£2.9bn) from $4.9bn (£4.1bn) a year earlier.
“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” said Andy Jassy, Amazon CEO. “We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits.”
Amazon says Prime members bought more than 300m products on Prime Day in July, which was its biggest yet. Shoppers bought more Amazon devices than on any other Prime Day, with consumer electronics, and homewares also seeing high turnover. More than a million registered developers are now using Alexa in devices, brands and technology.
In-store and virtual technology
Technology launches included a virtual try-on for shoes – now available in the UK and other European markets while the retailer added the next generation Dash Cart to its Amazon Fresh stores – of which 12 opened in the latest quarter. Amazon Dash Cart is a shopping trolley equipped with computer vision algorithms and sensors to identify products that are placed in it, and so enables shoppers to avoid checkout queues. The latest version adds screen-based search. It also launched store analytics for its US Amazon Go and Amazon Fresh shops, giving brands insights into how their promotions, products and campaigns perform.
The retailer and technology business also launched an Amazon Style shop in California, which uses machine-learning algorithms to produced receommdnations for shoppers, who can also browse from changing room screens and request other styles and sizes.
Robotics in warehouses and delivery
In its warehouses it is using a Proteus autonomous mobile robot that can carry objects while avoiding staff. Its Cardinal robotic workcell can lift and turn large or heavy packages in a confined space, using machine learning and computer vision, while its Amazon robotics identification unit provides easier package scanning. Finally, its robotic containerised storage system delivers products to employees in a more ergonomically friendly fashion, reducing the need for staff to reach up, bend down or climb ladders.
Amazon also started to deliver in the US with its Rivian electric delivery vehicles, and in the UK launched its first micro mobility hub that is expected to see ecargo bikes and walkers make five million deliveries in London’s ultra low emission zone. Later this year, Amazon will launch Prime Air drone deliveries in the US for the first time. Customers in Texas will have the option of free drone delivery of a range of thousands of items.
Sustainability
Amazon’s Climate Pledge Fund invested in electrolyser developers Electric Hydrogen and Sunfire. Electroysers are used to make green hydrogen from water and renewable electricity. So far the fund has invested in 18 companies as part of its strategy to invest in companies whose products and solutions will support the transition to a low carbon economy.
Commenting, Julian Skelly, head of retail EMEA at digital transformation consultancy Publicis Sapient, says: “Amazon has beaten the market consensus once again – continuing to grow despite the overall economic slowdown. This success is in no small way due to the stickiness of the Prime offering and their ever-strengthening distribution capabilities. Even with its expansion into pharmacy and the success of AWS, ecommerce remains Amazon’s focus. Prime drives loyalty with online shoppers though a compelling mix of services, experience and price. It is this loyalty that keeps customer coming back – driving the 7% growth in net sales.
Despite this, the inflationary pressures and a general slow-down in spending is affecting Amazon. Growth is slower this quarter than before. In almost all of the last 101 quarters, Amazon’s top-line growth has been greater than 10% – but not this quarter. Is this the right time for Amazon to push through its plans to hike the price of Prime subscription? In the UK, the annual subscription cost will jump by more than 20% – from £79 to £95. This move underlines confidence that Amazon has Prime customers locked into the habit of spending with them. For a few customers, the incremental cost will outweigh the value of Prime, but for most it will be a cost they’ll bear to keep the benefits. With this Amazon is forecasting net sales will return to historical growth of between 13% and 17% in Q3.”
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via https://AiUpNow.com July 30, 2022 at 08:55AM by Chloe Rigby, Khareem Sudlow,
