Amazon's Shipping Costs Rose 37% in Fourth Quarter 2015
The Web's leading retailer topped $100 million in revenue, but gave $4 billion of it back to shippers.
Amazon passed the $100 million revenue mark in 2015 and posted its largest quarterly profit during the holiday shopping season, yet the $4.2 billion it paid out to shippers represented a 37% increase over Q4 2014. In an earnings call with analysts yesterday, CFO Brian Olsavsky said Amazon itself had to get more involved with shipping logistics to satisfy customers. “Those carriers are just no longer able to handle all of our capacity that we need at peak,” he said.
Chief among those carriers was UPS, whose costs per package have risen to about $8 from $6.50 in 2000. Problems with holiday deliveries led Amazon, at December's end, to consider forming its own shipping fleet. The company is reportedly in talks with Boeing to lease more than 20,000 cargo jets.
Despite delivery issues, Amazon reported quarterly net income of $482 million and annual income of $596 million, which compared to a loss of $241 million in 2014.
The retailer's streaming video content and Prime Day promotion in July paid off with a increase of 51% in Amazon Prime members. Amazon claimed its number of streaming customers in Q4 2015 was double what it was in 2014.
The company announced that the Prime Now one-hour delivery service it launched a year ago is available in 25 metros in the U.S., UK, Italy, and Japan. The company lauchned Prime Same Day delivery in the UK and Germany.