Amazon’s first-quarter figures show the company on solid footing, says an analyst, with overall sales up by 8.6 per cent.
However, a slower pace of growth can be seen in both the products and services aspects of the business, observes Neil Saunders, MD of GlobalData.
“To be fair to Amazon, this is very much aligned with general trends in the market where, after a bumper holiday season, consumers were more modest in their spending.”
Amazon saw its net income increase by 64.2 per cent, partly due to a non-operating loss on its Rivian investment, which was not repeated this year, resulting in a 20.2 per cent increase in the company’s operating income.
Current market volatility, stemming from tariff and trade policy changes, will have mixed implications for the company.
“From an overall standpoint, the policy is unhelpful as it will push up prices across many products Amazon sells,” says Saunders.
“Increased financial stress and concern among consumers is also likely to dampen demand across many discretionary categories.”
However, Saunders stated that the company’s marketplace model will make Amazon more secure than other retailers, given its wide range of products that customers will turn to while searching for the best price and value.
The removal of the de minimis exemption, where parcels costing less than $800 could be sold and shipped directly to the US free of duty and import taxes, will have a slight impact on the business.
“Although this is disruptive to Amazon Haul, this is such a small part of the business and is so embryonic that it matters very little in the scheme of things.
“More broadly, the change is helpful to Amazon as it hamstrings both Shein and Temu and makes consumers more likely to look elsewhere for their needs as prices on those marketplaces move from being ultra cheap to just fairly cheap,” says Saunders.
Amazon has also become the go-to destination for premium products, particularly in its beauty category.
“The deal with Saks to launch a luxury storefront on the site will further cement Amazon’s presence in this higher-end part of the market, even if market share gains will remain modest,” he says.
Saunders believes Amazon will remain in a good position moving forward, despite dealing with the negative impacts driven by external market forces, given its continuous innovations across areas to ensure a solid footing in the online retail market.
