Amazon Posts 1st Loss In 7 Years: Lost Rs 29,000 Crore In 90 Days As Online Shopping Slows Down
Amazon reported its very first quarterly loss since the year 2015 on Thursday. The money-making behemoth has been stalled by a slowdown in the absence of pandemic-induced need for online shopping and a huge write-down of its investment in an electric-vehicle startup.
Amazon reported a quarterly loss
Amazon reported a loss of $3.84 billion, or $7.56 a share, for the first quarter of the year. A year ago, the company had reported a profit of $8.1 billion, or $15.79 a share, for the first quarter. Wall Street analysts expected a profit of $8.35 a share in the latest quarter, as per FactSet.
The slowdown in online spending is very real. While in-store sales have risen, March is the first month that shows a decline in online sales since the pandemic began, as per the Mastercard SpendingPulse, which tracks the spendings done over the Mastercard payments network and survey estimates for other payments made with cash and checks.
Amazon thrived during the pandemic
Amazon thrived during the Covid-19 pandemic. People were stuck at home and had to limit human contact, so they turned online to purchase what they needed. But this unprecedented growth has now slowed down as vaccinated Americans feel more comfortable going out. As per the e-commerce research firm MarketPlace Pulse, the value of goods sold on Amazon last year grew by half the rate compared to 2020.
Amazon Prime’s membership fee has been hiked
Like many other companies, Amazon is under a lot of pressure due to inflation, supply-chain issues and labor shortages. Last quarter, Amazon increased the annual Prime membership fee by $20. The membership fees was increased for the first time since 2018.
Revenue increased by 7% to $116.44 billion, as compared with $108.52 billion in first quarter 2021, representing the company’s sixth consecutive quarter of revenue over $100 billion. Amazon had projected sales between $112 billion and $117 billion while the analysts surveyed by FactSet were expecting $116.5 billion.
Amazon expects sales for the current quarter to between $116 billion and $121 billion. Amazon’s expectation is lower than the average expectation among industry analysts of $125.33 billion, as per FactSet
The results come as the company faces a growing unionization push from its workforce. A second union election is currently ongoing at a company warehouse on Staten Island, New York, the same borough where workers at a nearby facility voted to unionize earlier this month. Amazon has filed objections over the election with the National Labor Relations Board and is trying to re-do the vote.
The final outcome of a separate union election in Bessemer, Alabama, is still uncertain with 416 outstanding challenged ballots. Hearings to review the ballots are expected to begin in the coming weeks.