Amazon’s Profit Drops after Launching Faster Shipping Service

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. outmaneuver / ˌaʊt məˈnu vər / (v) – to defeat or get an advantage over a competitor

    He plans to outmaneuver other players in the shipping industry by offering 24/7 services.

  2. roll out / roʊl aʊt / (phrasal) – to release or launch something

    The company is scheduled to roll out its new delivery service next quarter.

  3. take a dive / teɪk ə daɪv / (idiom) – to experience sudden fall or decrease in value

    After the bankruptcy news came out, the company’s shares started to take a dive.

  4. approximately / əˈprɒk sə mɪt lɪ / (adv) – close to the exact number or value of something

    According to a study, approximately three in ten cardholders don’t pay their outstanding balance on time.

  5. projection / prəˈdʒɛk ʃən / (n) – an expected amount or result based on existing information

    His projection of the company’s annual profit is often accurate.


Read the text below.

Online retail giant Amazon reported a decline in profit in the third quarter of 2019 following the launch of its one-day shipping service.

In an effort to outmaneuver its competitors, Amazon rolled out its new service promising decreased delivery time from two days to one. However, unlike rival company Walmart’s two-day shipping service, customers have to pay a yearly subscription fee of $119 to avail of Amazon’s new service.

Deducting liabilities and the expenses for the company’s operations, Amazon’s profit took a dive, dropping 26% compared to last year’s third quarter figure. This is primarily due to the $1.5 billion price tag on its new shipping service, costing Amazon approximately twice its projected expenses.

Amazon CEO Jeff Bezos defended the company’s move, saying it was a huge investment for Amazon but that it was for the best interest of the customers. In fact, customers have given positive responses to the one-day shipping service; and despite the profit downgrade, the company reported a 24% increase in revenue or raw gain from its products and services.

Amazon predicts that its fourth quarter revenue will range from $80 billion to $86.5 billion, which is lower than the estimated $87 billion business analysts predicted for the company. Nevertheless, Amazon’s management is confident that the company’s new service will yield good results in the long run.

According to a business expert, Amazon’s projection might prove accurate. The expert believes that Amazon’s willingness to make temporary sacrifices for its long-term earnings remains one of the company’s strengths.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

• Do you think Amazon’s projected revenue, in the long run, will outweigh its current profit downgrade? Why or why not?
• Do you think Amazon’s one-day shipping service with subscription fees is better than Walmart’s two-day shipping service without subscription fees? Why or why not?

Discussion B

• What are the challenges of running a delivery service or a shipping company? Discuss.
• How do you think these challenges can be addressed? Explain.