How Amazon Beats Inflation

Inflation has taken its toll on conventional retailers like Target and Walmart, which have seen sales and profits fall, but that’s not the case for Amazon.

Instead, the online retail giant on Thursday reported second-quarter sales that beat analysts’ expectations and provided an upbeat outlook. Wall Street liked what it saw, sending Amazon shares sharply higher in after-hours trading.

“Despite an additional rate hike by the Fed, inflationary pressures and heightened market volatility, Amazon posted a strong second quarter of $121.23 billion [revenue/sales]Stage Fund GP Krista Morgan said in an email to the International Business Times. “The company has managed to exceed expectations and overtake rival retail giants like Walmart, which have been forced to reassess profit margins.”

How did Amazon do this? With efficiency and innovation.

“Despite continued inflationary pressures in fuel, energy and transportation costs, we are making progress on the more controllable costs we referenced last quarter, specifically improving the productivity of our fulfillment network,” said Andy Jassy, ​​CEO from Amazon, in a press release following the release of the company’s Q2 results.

“We’re also seeing increasing revenue as we continue to make Prime even better for members, both by investing in faster shipping speeds and adding unique benefits like free delivery from Grubhub for a year and exclusive access to NFL Thursday Night Football games beginning September 15.” and the release of the highly anticipated series The Lord of the Rings: The Rings of Power on September 2.”

Still, there’s Amazon’s cloud business and web services that make Amazon much more than an online retailer and video streaming provider. “As consumers shy away from retail and electronic goods because of cost concerns, cloud services have remained resilient and in demand,” Morgan added.

Will Milewski, SVP, Cloud Platform Engineering at Hyland, agrees and sees innovation in this area as a revenue driver.

“AWS continues to lead the cloud space as demonstrated by today’s results; the reported growth demonstrates increased demand for cloud services and speaks to the greater agility organizations achieve when partnering with AWS,” he told IBT in an email. “Over the coming months, we can expect continued growth based on the recent launch of multi-service products and global expansion plans. As organizations face uncertainty in this fragile economy, IT leaders are turning to the cloud to manage costs, and today’s announcement validates just that.”

Meanwhile, Amazon could benefit from price increases for its Amazon Prime services in Europe.

“While it’s inevitable that some shoppers might cancel their membership with a price increase, I expect most Prime members will remain enrolled,” Matt Kates, SVP at loyalty solutions provider Clarus Commerce, said in an email IBT. “In our previous research, 75% of consumers said fast and free shipping was the top reason for joining Prime and the top reason they renewed Prime. Not to mention that users have ranked Amazon’s streaming service as the second-best reward for signing up, so consumers are unlikely to be willing to part with that benefit any time soon.”

High Amazon customer satisfaction with Amazon Prime confirms that the company has developed “lock-in” relationships. These are formidable barriers to entry for competitors in Amazon’s market, which will help the company stave off challenges like inflation and provide superior economic returns to its equity holders for years to come.

Editor’s Note: The author owns shares in Amazon.

https://www.ibtimes.com.au/how-amazon-beats-inflation-1835966?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution How Amazon Beats Inflation

Fry Electronics Team

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