Amazon reported first-quarter last week. Amazon reported earnings of $7.09 per share which was over 100% higher year over year. Net sales were $59.70 billion which reflected year-over-year growth of 17%.
Breaking down the revenue, North America revenues (60% of sales) increased 16.6% from the year-ago quarter to $35.81 billion. International revenues (27% of sales) increased 9% year over year to $16.19 billion. Amazon Web Services (AWS) revenues (13% of sales) surged 41.4% year over year to $7.69 billion.
On the news price broke the daily supply at $1910.
During the subsequent conference call, Amazon dropped a bombshell that could have far-reaching implications, not only for rivals in the e-commerce industry but for its brick-and-mortar competitors as well. In a move that could reignite the company’s slowing revenue growth, Amazon said it was working to shorten the standard delivery option for Prime members from two days to just one day.
Olsavsky said “This is all about the core free two-day offer morphing into — or evolving into a free one-day offer,” and Amazon plans to spend an incremental $800 million to fund the initiative in the second quarter alone. The company is betting that the resulting increase in Prime subscribers and added purchases will cover the additional cost.
Amazon is hoping that decreasing the amount of time it takes most orders to arrive will encourage customers to make more purchases from its e-commerce website. Rather than popping out to the store for some items, shoppers might be content to have them arrive the following day.
The company is relying on a concept called shipping elasticity. In its simplest form, this means the shorter the shipping time, the more likely customers are to buy additional items.
Many analysts are raising their target price on Amazon, including JP Morgan who see price going to $2200. However, price will have to content with the double top / daily supply zone at $2040.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
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