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Recently, Amazon released its second quarter financial report ending June 30, 2022. Loss of $2 billion in 3 months According to the financial report, Amazon's net sales in the second quarter increased by 7% to $121.2 billion, while the expected $119.09 billion. Compared with $113.1 billion in the same period last year, net sales increased by 10% year-on-year, excluding the unfavorable impact of $3.6 billion caused by the year-on-year change in exchange rates throughout the quarter . However, Amazon still failed to make a profit in the second quarter after it suffered its first quarterly loss in seven years in the first quarter. Amazon's net loss in the second quarter was US$2.028 billion , and its operating loss in the North American market was US$627 million. The main reason for the loss was that Amazon's investment in electric vehicle company Rivian Automotive Inc failed to meet expectations, resulting in a loss of $3.9 billion in the second quarter , bringing its total investment losses this year to $11.5 billion. Online store business declines The financial report shows that as the impact of the epidemic subsides, Amazon's core e-commerce business is also affected. In the second quarter of 2022, Amazon's online store business fell 4% year-on -year , but physical store sales continued to rebound from the same period last year, increasing by 12%. Self-operated sales accounted for a record low Data shows that in the second quarter of this year, Amazon's self-operated sales were US$50.9 billion , accounting for less than 42% of its overall net sales of US$121.2 billion. This is the lowest in history. NO.3 Amazon's cash flow declines Not only that, in the 12 months ended June 30, 2022, Amazon's operating cash flow fell 40% to $35.6 billion , and free cash flow decreased to an outflow of $23.5 billion , while in the 12 months ended June 30, 2021, Amazon's operating cash flow was $59.3 billion and free cash flow inflow was $12.1 billion. Amazon cuts 99,000 jobs and implements more than 100 policies to control costs In order to effectively control costs, Amazon has also begun to save costs in various aspects, the first of which is manpower. Recently, Amazon executives said at a financial report conference that from the first quarter to the second quarter of this year, Amazon's direct employees decreased by 99,000, a record decline. The main reason for the decline was the large-scale layoffs in Amazon warehouses and distribution centers. Amazon executives cited the layoffs across its delivery and warehouse networks as growth slowed and warehouses were overstaffed.
Amazon also plans to slow hiring at its headquarters and other divisions and will continue to add headcount in a "very targeted" way, including engineering positions in Amazon Web Services and advertising, while keeping a "sharp focus" on profitability. In fact, Amazon's warehouse employment has been declining for several consecutive quarters , but even with the month-on-month decline, Amazon's employment still increased by 14% year-on-year, higher than 1.36 million in the second quarter of 2021. Amazon CEO Andy Jassy said in May that Amazon had hired hundreds of thousands of new workers to meet the increased demand during the pandemic and improve the quality of delivery services, but now Amazon is determined to control costs and focus more on profits. In addition to large-scale layoffs, Amazon has frequently updated a number of policies to control costs since 2022: 1. Reduce excess facilities and sublease excess warehouses- All of Amazon’s non-grocery stores are closed, including 68 bookstores, Amazon 4-star stores, and pop-up stores;
- Cancel warehouse expansion plans, sublease at least 10 million square feet of warehouse space and delay construction of new facilities.
2. Transfer inflation pressure and reduce operating costs For sellers: FBA fees will increase across the board, with additional fuel and inflation surcharges on US and European sites; For buyers: Fees for Prime, its delivery and streaming service, are rising by up to 43% a year in Europe. Judging from Amazon’s second-quarter financial report ending June 30, 2022, the effects of this series of cost-cutting and efficiency-enhancing measures have already become apparent: Amazon’s second-quarter revenue exceeded market expectations. Therefore, Amazon is optimistic about its sales in the coming months, and it expects sales in the third quarter to be between $125 billion and $130 billion, a year-on-year increase of 13% to 17% , which may be higher than the market expectation of $126.4 billion. It also estimates that net profit in the third quarter will be between $0 and $3.5 billion. Amazon also said that the business growth of third-party sellers is still very strong and is a very important part of its business. Therefore, in the current market environment, if cross-border sellers adjust their operating strategies in a timely manner, there is still room for growth.
Ps: The content of this article is compiled by the Foreign Trade Cross-border Research Center and Foreign Cross-border from Cross-border Must-Reads, Cross-border E-commerce, Yien, E-commerce News, etc. Please indicate the source when reprinting. |
