E-commerce giant, Amazon, saw its share prices tumble by closing at the end of the week after the company reported disappointing profit figures for the third quarter, dropping by around 25% between July and September.
In an announcement made to investors, the company blamed rising shipping prices as the core reason why profits had dropped, with the retailer earning approximately $2.1bn in the last quarter.
Market Dominance Threatened
Whilst this may not seem like a significant spiral downwards, it presents concern that Amazon may not have the stronghold on the retail market that it once boasted.
The company said that it spent upwards of forty per cent more on shipping costs than it had during the third quarter of 2018, with a figure being estimated at around $10bn in shipping packages to consumers all over the world.
Sales Growth
However, the news is not all bad for Amazon: year on year, sales on the retailer’s website actually went up by 24%, making an astonishing $70bn in overall revenue.
Though it appears that these growing costs are what’s eating into the profit margins of the company, causing their numbers to plummet in quarterly reports.
With Amazon now offering one day shipping to its Prime customers in most major countries, delivery costs have never been higher- and the company doesn’t plan to stop investing.
Founder and boss, Jeff Bezos, believes that these exclusive offers will pay for themselves- already, orders through Amazon Prime have increased significantly since the option was first introduced.
The company are already anticipating that their profits will return to their usual steady upward streak as the festive season approaches and are predicting fourth quarter growth of around 10%.
Market Reaction
On the stock market, Amazon’s shares dropped by 6% following the announcement, though this is expected to stabilize over the coming days as many experts believe Amazon to be a relatively safe option for investors.
However, with increasing taxes in core countries like China and other investments by the company yet to pay off- including a billion-dollar deal with retailer Whole Foods- some are beginning to worry that Amazon may not have as successful a fourth quarter as it is predicting.