Prime Day will return in July, according to Amazon who made the announcement in its first-quarter earnings report for fiscal 2022 last week. The e-commerce titan reported a net loss of $3.8 billion or a $ $7.56 deficit per share compared to the year-ago period ended March 31.
The loss was attributed to a $7.6 billion charge from the company’s investment in Rivian, an electric car company Net sales increased 7% to $116.44 billion from $108.52 billion. Analysts had expected sales of $116.45 billion.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” said Amazon CEO Andy Jassy.
Amazon also said operating expenses of $112.7 billion were up from $99.6 billion a year ago. Expenses for fulfillment totaled $20 billion while technology and content accounted for $14.8 billion. Amazon said its consumer business has grown 23% annually over the past two years following 39% growth in 2020. The company nearly doubled the size of its fulfillment capacity over the past 24 months and analysts with Piper Sandler said it is going to take time for the company to grow into its new capacity.
Jassy also said Amazon is no longer chasing physical or staffing capacity after the major expansion in the past two years.
“We are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” he said. “We know how to do this and have done it before. This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
Amazon expects second-quarter revenue to range between $116 billion and $121 billion which will include another Prime Day event in July in the U.S. and 20 other countries. The sales event has proved to be a revenue driver for Amazon over the years, prompting other retailers like Walmart and Target to offer similar events to try and mimic Christmas in July.
Prime Day is a strategy to encourage consumers to purchase goods ahead of the holidays or just to fill out their own wish lists. Adobe estimated that total U.S. online spending with retailers exceeded $11 billion during Prime Day 2021, which was held June 21-22. The marketing firm said this represents a 6.1% gain over the 2020 event.
Economists expect consumers will look for values in the coming months amid rising costs of consumables and fuel that are squeezing disposable incomes. Jassy said Prime subscribers will be able to save on products from national brands and small businesses in every category.
Amazon also raised the cost of its Prime subscription in March to $139 annually or $14.99 per month. That represents a 16.8% increase on an annual basis and 15.39% for those paying monthly. Analysts said this will boost revenue this year to the tune of roughly $30.8 million.