What’s Going On Here?Amazon posted a mixed set of quarterly earnings late on Thursday, but you’re going to just adore the virtually assisted makeover the tech giant’s about to get. What Does This Mean?The pandemic-driven surge in online shopping continued to wear off last quarter, with revenue from Amazon’s ecommerce business growing just 6% compared to the same time in 2020. But at least the working-from-home trend doesn’t look like it’s going anywhere fast: Amazon Web Services – the company’s much more profitable cloud computing segment – saw revenue climb by a better-than-expected 40%.
Things could be looking up going forward too: Amazon announced it’d be upping the price for its Prime membership in the US soon – its first price rise since 2018. And since that rollout doesn’t cost Amazon a penny, it’s an extra pile of cash that’ll go straight to its bottom line. Investors, for their part, wanted some of it straight in their pockets: they sent Amazon’s stock up 18% after the news. Why Should I Care?Zooming in: Amazon’s got style.
Amazon’s well aware that customers’ preference for “real” stores could stick around, which might be why the company announced last month that it’s planning to launch its own clothing stores. “Amazon Style” will give fashionistas AI-based recommendations in real time, and could help the company claim an even bigger chunk of the lucrative clothing market. It hardly needs it: Amazon overtook Walmart to become the top US clothing retailer last year, according to banking giant Wells Fargo.
Zooming out: Amazon vs inflation.
Amazon’s customers might not just be ditching online shopping, but shopping altogether: data out last week showed Americans spent an inflation-adjusted 1% less on goods and services in December than the month before. That might not sound like much, but it shows they’re feeling the pinch from the country’s 40-year high inflation. And if that continues, Amazon’s earnings next time around might not be so pretty. | 