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Amazon profits hit by investment in faster delivery

By Huw Hughes

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Business

Amazon has reported a drop in third-quarter profit following further investment in its next-day delivery service.

While net sales at the US retailer giant increased 24 percent to 70 billion euros in the third quarter compared with 56.6 billion in the third quarter of 2018, net income fell to 2.1 billion dollars compared with 2.9 billion dollars the previous year.

The fall in the company’s bottom-line was a result of its increased investment in a programme to offer one-day delivery to Prime Loyalty members and better position itself against rivals such as Walmart and Target.

Shipping costs increased 46 percent in the quarter to 9.6 billion dollars.

Amazon said it now expects sales growth of between 11 and 20 percent for the fourth quarter of the year, which includes the important festive season.

“We are ramping up to make our 25th holiday season the best ever for Prime customers — with millions of products available for free one-day delivery,” said Jeff Bezos, Amazon founder and CEO.

“Customers love the transition of Prime from two days to one day - they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers. And although it’s counterintuitive, the fastest delivery speeds generate the least carbon emissions because these products ship from fulfillment centers very close to the customer - it simply becomes impractical to use air or long ground routes.”

Photo credit: Amazon, Facebook

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