Maker Amazon's profit more than doubles in three months

Daniel Fowler
April 26, 2019

"We're now working on evolving our Prime free two-day shipping program to be a free one-day shipping program", Amazon CFO Brian Olsavsky said in the company's quarterly investor relations call.

Amazon has long offered delivery in a day or quicker for some items, but the change will mean free one-day shipping will be the default, rather than two-day.

"We're now working on evolving our Prime free two-day shipping program to be a free one-day shipping program", Olsavsky said.

Amazon didn't say when the change to its U.S. Prime membership will happen, but it said Thursday that it in the past month it has been increasing its selection of items eligible for one-day deliveries. Amazon Web Services accounted for just 13 percent of Amazon's Q1 revenues, but the cloud business pulled in almost half of the company's operating income.

"More broadly, we're seeing continued momentum in enterprise migrations", he said. That investment will go toward improving warehouses and delivery infrastructure.

For now, it isn't clear when Amazon will complete the transition to the one-day shipping times. With one-day delivery positioned as the standard for Prime users, Olsavsky believes it can increase consumer spending. Sales were $59.7 billion, compared with $51 billion in the period a year earlier - in line with the average estimate of analysts compiled by Bloomberg.

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Amazon's net income rose to US$3.56 billion, or US$7.09 per share, in the first quarter ended March 31, from US$1.63 billion, or US$3.27 per share, sending its shares up 1.2 per cent after the bell. Amazon will reveal more details about this plan in Q2.

AWS revenue gained nearly 42 per cent from a year earlier to US$7.7 billion.

"Amazon delivered slower growth in all key segments - AWS, advertising and e-commerce - but margins skyrocketed, seemingly driven by less aggressive investment", said Atlantic Equities analyst James Cordwell.

But its breakneck growth has also caught the attention of regulators - and President Donald Trump - who argue that the company's market dominance gives it too much power.

Revenue from seller services jumped 20 percent to $11.1 billion in the first quarter, while ad and other sales surged 34 percent to $2.7 billion, the company said. The unit's operating income was $2.2 billion, half of Amazon's total. Olsavsky said that the new plans will expand the program to more products and more zip codes.

The shipping news comes as the Verge reported on high firing rates at Amazon fulfillment centers for not working fast enough.

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