Amazon sales slow following pandemic surge

29 Apr 2022

Image: © bloomicon/Stock.adobe.com

The e-commerce giant suffered its first quarterly loss since 2015 but its AWS cloud division saw revenue grow by 37pc.

Amazon is starting to experience a comedown following the massive surge in e-commerce that took place during the Covid-19 pandemic.

In the first quarter of 2022, the tech giant suffered its first quarterly loss since 2015 – losing $3.8bn compared to its profit of $8.1bn during the same period last year.

Future Human

One of the biggest contributing factors to the loss came from Amazon’s common stock investment in EV start-up Rivian Automotive, which had a pre-tax valuation loss of $7.6bn.

Another challenge for the e-commerce player is rising operating costs. The higher price of fuel is making deliveries more expensive, while the need to attract more workers has meant offering higher pay.

In terms of revenue growth, the company reported $116.4bn in sales in the first quarter, up 7pc from a year earlier. However, this marks a massive slowdown compared to the 44pc growth seen in the first quarter of 2021 after a pandemic-driven e-commerce boom.

The results fell short of expectations and the tech giant’s shares fell by more than 10pc in after-hours trading.

It wasn’t all bad news for the company though. Its cloud division, Amazon Web Services (AWS), saw sales increase by 37pc to $18.4bn.

CEO Andy Jassy said the pandemic and the war in Ukraine have brought “unusual growth and challenges” for the company. But AWS has continued to see growth as it has “been integral in helping companies weather the pandemic and move more of their workloads into the cloud”.

“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfilment network. We know how to do this and have done it before,” he added.

“This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”

The company also confirmed that Amazon Prime Day would take place in July this year.

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Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com