Amazon profits surge as company announces cost increase to Prime membership
Amazon’s profits surged to $14.32bn in a fourth quarter marked by record holiday sales, the company said in its earnings report on Thursday, while also announcing an increase in the price of Amazon Prime membership to help compensate for rising operating costs.
In the three months ending in December 2021, sales for the e-commerce giant were up 24% from a sluggish third quarter to $137.4bn. Sales are also up 9% year-over-year from the same period in 2020.
The fourth quarter includes the holiday shopping season, a crucial period for retail. According to its quarterly report, Amazon had its most lucrative Black Friday and Cyber Monday weekend this year. And “between Black Friday and Christmas, US-based third-party sellers sold an average of 11,500 products per minute”, the company announced it its earnings release.
But the company is still feeling some of the effects of a battered supply chain and has increased wages to attract and retain its sprawling workforce in the tight labor market. In September, Amazon upped its average starting wage again to $18 an hour, and began including signing bonuses to entice hourly workers.
“Lost productivity and network disruptions were driven primarily by labor capacity constraints due to challenges in staffing up our facilities for peak,” Amazon Chief Financial Officer Brian Olsavsky said in an earnings call on Thursday, referring to the busy holiday season.
“This was driven by the very tight labor market in the second half of 2021, and more recently by the emergence of the Omicron variant. We do expect these cost challenges to persist into Q1, albeit adjusted for lower seasonal volumes relative to the fourth quarter.”
To compensate, the company is turning up the dial on one of its most
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