Higher costs halve Amazon's profits

In the closing quarter of last year, Amazon saw its operating profit nearly halve, mainly due to increased costs. The e-commerce giant now announces a price increase for its popular loyalty programme Amazon Prime.

Inflation hits

In the period from October to December, Amazon’s turnover increased by 9 per cent to 137.4 billion dollars (120 billion euros). Especially the sales events Black Friday and Cyber Monday were a hit, according to the company.

Nevertheless, at 3.5 billion dollars (3 billion euros), the operational profit came out nearly fifty per cent lower than a year ago. Amazon also feels the consequences of rising inflation. In addition, the company had to spend more on staff due to shortages in the labour market in the United States.

The company did achieve a considerable capital gain on a stake in the electric car manufacturer Rivian, which almost doubled its net profit to 14.3 billion dollars (12.5 billion euros).

Prime price increase

To offset the increased costs, Amazon is raising the price of its Prime subscription in the United States for the first time since 2018. This loyalty programme offers members a streaming service and all kinds of other benefits, such as fast delivery. On an annual basis, the price will increase by the equivalent of 17.5 euros.

For the first quarter of 2022, Amazon expects sales growth of between 3 and 8 per cent. The operating profit should be between 3 and 6 billion dollars (2.5 to 5 billion euros), significantly lower than the 8.9 billion dollars (8 billion euros) in the same period last year.