Amazon Q3 Results: Deliveries will deliver the goods for Amazon investors

Amazon Q3 Results: Deliveries will deliver the goods for Amazon investors

ParcelHero’s Head of Consumer Research, David Jinks, analyses Amazon’s Q3 results. Amazon’s shares slumped 5% following last night’s announcement of its Q3 results; even though it enjoyed a 29% increase in sales revenue. That’s because its earnings were just 52 cents per share rather than the expected 78 cents.

But Amazon’s investors are being over hasty in jumping ship as the reason Amazon’s operating expenses rose 31.5% to $10.94bn is in no small part because it is building up its warehouse and delivery infrastructure across the US, the UK and across Europe.

The company’s massive investment in its revolutionary logistics network will mean greater profits for those investors who keep faith with the e-commerce giant. Increasingly delivery options are at the heart of customer choice; and prime amongst them is Amazon’s Prime delivery choices. Free deliveries, same hour deliveries and now Prime Fresh grocery deliveries are only possible because Amazon has bypassed traditional parcel companies such as the Royal Mail and become its own transport provider.

The secret behind these profits is Amazon’s Prime members. Prime Members spend 4.6 times more than non-members with the online giant. There’s no wonder the latest figures suggest 20% of Americans – 1 in 5 adults – are Prime members. And it’s all based on the power of its delivery network.

It’s hard to believe but, at the end of 2014, Amazon had earned a cumulative net profit of just $1.9 billion in its entire twenty year history as a public company, despite more than $400 billion in sales during that time.  That’s because it ploughed the money back into developing Amazon Logistics. Fortunately, many investors kept faith and that started paying off for them in 2015. While some investors are clearly disappointed with the latest earnings per share figures, the final reward when its logistics plans pay off will be all the sweeter.

ParcelHero’s 2015 report – Amazon’s Prime Ambition – highlighted Amazon’s ambitions to extend Prime membership through its unbeatable delivery proposition.. We explained why Amazon’s revolutionary plan to take charge of its own deliveries would pay off and help its on its way towards its ultimate goal: of being the pipe line through which everything we buy flows. Amazon’s continued investment means it is still on course.

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