Amazon Doubles Profits In Q1

Source: REUTERS/ Abhishek N. Chinnappa

Amazon destroyed profit expectations for its first quarter, with profits more than doubling from last year. The profit boom is thanks to increasing online sales (sales were up 43% in the quarter to $51 billion), advertising and Amazon Web Services (which saw a 49% rise in sales from last year). Amazon announced last week that the annual membership fee for Prime members will increase by $20 to $119 a year, which also posted an increase in revenue for the quarter of 60%. According to eMarketer, Amazon accounts for close to 43 cents of every dollar spent online. 

Amazon's subscription revenue was also up for the quarter by 60% at $3.1 billion. The rise in the annual membership fee is expected to add a windfall this business unit's revenue. Chief Financial Officer Brian Olsavsky said "We do feel it's still the best deal in retail."  Prime customers are eligible to receive free two day shipping on selective items, as well as access Amazon's music and video streaming services. Items eligible for two day shipping have grown by 5x since the previous price increase to the prime membership service four years ago. 


There was good news across almost all of Amazon's business units in this first quarter of 2018. AWS, Amazon Web Services, saw an expansion in profit margin and posted sales of $5.44 billion in the first quarter. In revenue, it remains the largest company in sector. Due to the acquisition of Whole Foods Market, Amazon's employee global headcount is 60% higher than it was a year earlier with 563,000 part-time and full-time employees. 


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