The news: Amazon returned to profitability in Q3 as net sales grew 15% year-over-year (YoY), but revenues came in slightly below analysts’ expectations as macroeconomic factors weighed on sales.
Cost-cutting measures in play: Under CEO Andy Jassy, Amazon has tightened its focus on its core businesses—like ecommerce, grocery, advertising, and AWS—while aggressively cutting costs wherever possible.
Recession-proof: While Amazon is by no means immune to the broader slowdown in discretionary spending, it is better equipped than most retailers to ride out the storm.
Looking ahead: One key to understanding Amazon’s priorities is to look at its acquisitions.
The big takeaway: Amazon may be well-positioned to cope with a downturn in consumer spending, but its outlook is by no means rosy. Its inability to record a profit for its retail business despite relatively strong sales growth—and a Prime Day boost—suggests a tension between its desire to offer as much convenience as possible, and the vast amount of resources required to do so.
Still, strong advertising growth and AWS revenues will help keep the flywheel turning in Q4 and beyond.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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