Hot Topics

Amazon’s Rapid Expansion Strategy Helped To Increase Sales but Fails To Impact Profits

Amazon.com Inc is on the fast growth track with its rapid expansion strategy which is helping it to reach the new height of sales figures but fails to maintain the same pace in generating profits and revenue for the organization. Yesterday, they have published their second quarter sales and profit figures and they seem to be quite happy to achieve 25 percent increase in the total revenue of this year against last year with a total of $38 billion. This has heavily damaged the brick and motor sector due to the diversion of the majority of customers towards online shopping. But this was followed by the new post where they claimed to have a drop in their quarterly income by 77 percent and there are chances that they might lose $400 million in the form of operating profit.

This has urged them to make new investments in new markets so that Amazon should be able to retain their dominant status in the online market. It is mandatory since third quarter is considered to be a profitable period and investment in this time would be very beneficial and profitable for the organization. Amazon is focusing on the logistics part of the business through which they could be able to ship the goods to the customers faster than their current delivery time. The video streaming sector is also flourishing currently and Prime membership facility of Amazon helped it to retain their subscribers from quitting the channel and convince other customers who have opted for free services to subscribe for monthly services.

Prime membership has proved beneficial for the company since it motivates the customers to purchase again and again from their websites and online services. This has led to the increase in prime fees by 51 percent and the total reached up to $2.2 billion. According to the report published by Cowen & Co analysts, it is expected that the subscriber list of Amazon so high that there would be the rise of 50 percent to their current list. It is clearly evident that the Amazon is currently in a very fast pace mode of expansion taken a toll on the profits of the organization during this quarter but it’s just the temporary failed in every sector soon in the favor of the organization. where there is heavy investment done by the organization to ensure that they had sufficient investments done in order to get there

This had led to the slow pace in the revenue generations for the organization but surely the wait would over very worth waiting for.