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Amazon Expects Slower Sales Growth As Covid Situation Improves

The biggest online platform has earned billions during the peak Covid-19 period!

Amazon Expects Slower Sales Growth As Covid Situation Improves

The US giant has made millions of customers during covid lockdowns. It has collected record profits over the past one and a half years.

Amazon has made billions of revenue in this tenure. As per BBC stats, The US giant revenue climbed 27% to $113bn (£81bn) in its second quarter, but this missed analysts’ expectations. Earlier in the Covid pandemic, Amazon posted record profits, signed up more than 200 million customers to its Prime service, and recruited more than 500,000 workers to keep up with surging demand.

But now as Covid situations are getting better across the globe and lockdowns have been upheld, businesses and shops are being reopened and people are going back to work. Keeping that in mind, Amazon is predicting a slower growth rate. Meanwhile, their shares fell more than 7% in after-hours trade.

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Recently, The founder of Amazon Jeff Bezos decided to step down as the CEO as he’s busy touring space with Blue Origin. Andy Jassy took over his role who was previously in charge of Amazon’s cloud computing division, Amazon Web Services (AWS).

“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE [personal protective equipment], food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic.

At the same time, AWS has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud.”

Mr. Jassy discussing about AWS

In the second quarter, AWS was a bright spot, seeing revenue rise by 37% to $14.8bn.

Amazon is the biggest online shopping platform is about to see a slower growth rate, on another hand, Samsung is expecting a 53% sales profit boost. Whereas, its biggest competitor Apple is also expecting a 50% iPhones sales increment despite the global chip shortage.

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According to BBC, Last quarter Amazon, the biggest online retailer in the world, announced a deal to buy the film studio MGM for $8.5bn, expanding in Hollywood at the same time as it is running a grocery chain, building a healthcare business, and facing scrutiny from regulators worldwide.

The company has offered an average of $17 in hourly wages – more than double the US minimum – plus signing bonuses to attract 75,000 workers during a labor shortage.

Business analysts regarding Amazon’s future think the company has to spend more in the future to deliver goods and allocate more revenue.

When you’re only selling $1,000 of product a year, boosting sales by 40% is easy. When your annualised sales reach $400bn, finding an extra $160bn of sales is pretty difficult.

Nicholas Hyett, equity analyst at Hargreaves Lansdown

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Written by Hammad Khalid

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