Amazon Profits Dip
Written by JDPGlobal | Wednesday, 27 July 2005
Amazon.com has reported that sales have increased whilst profits have decreased. Net profits for the three months to June of this year fell by 32 percent, which represents some £28 million when compared to the same time last year. Amazon belongs to the ‘ten year old club’, with companies like Ebay and Yahoo, starting life as a modest online book shop the organisation transformed itself into an online department store.
However, industry experts and analysts believe that the reason for this accounting imbalance is because Amazon has experienced certain higher costs and might have introduced too much discounting, hence the drop in profit. Amazon is experiencing greater delivery costs after introducing a new ‘Prime Membership’ system this year, which allows the participants unlimited 2 day delivery guarantees in the United States for $80, (£35) which is considered a bargain.
The intention behind this ‘Prime Membership’ scheme is that customers will purchase more over the longer term.
