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Amazon Q3 profits fall 25% amid rising shipping costs

Online retail giant Amazon has reported a 25% fall in Q3 net income to $2.1bn (£1.6bn) despite a 24% increase in sales to $70bn (£54.5bn), as rising shipping costs dented its bottom line.

For the three month period ending 30 September Amazon said its shipping costs surged 46% to $10bn (£7.8bn). Amazon in part attributed the increase in costs to its drive to increase one-day shipping to its customers, with the company’s founder saying the move is the “right long-term decision”.

Growth at its cloud computing arm, Amazon Web Services (AWS), which is seen as the main driver of the company’s revenue gains, slowed to an increase of 36% to $9bn (£7bn) compared with a 46% increase the previous year.

Amazon’s physical store growth also slowed with a 1% fall in revenues to $4.2bn. Looking ahead Amazon said it expects Q4 net sales to be between $80bn (£62bn) and $86.5bn (£67bn) ,or to grow between 11% and 20% compared with fourth quarter 2018.

It also expects operating income be between $1.2bn (£935m and $2.9bn (£2.2bn), compared with $3.8bn (£2.9bn) in Q4 2018.

Founder and CEO Jeff Bezos said: “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. 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. Huge thanks to all the teams helping deliver for customers this holiday.”

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