The frequency and volume of these purchases have also risen significantly.
Amazon exceeded expectations with robust third-quarter earnings results.
In its latest announcement regarding third-quarter performance, Amazon revealed that consumers are gravitating towards more affordable products while increasing their purchase volumes.
"As consumers become more cautious about their spending habits, we continue to reduce prices and enhance our shipping speed. This strategy appears to resonate well with our customers, as evidenced by strong unit growth that surpasses even our revenue increases," stated Andy Jassy, CEO of Amazon, during the earnings call held on Thursday.
Brian Olsavsky, Amazon's Chief Financial Officer, highlighted that shoppers are turning to the platform for budget-friendly essentials such as "healthcare products, beauty items, personal care goods, and non-perishable groceries."
Although these categories typically feature lower average selling prices, Olsavsky emphasized that this trend is beneficial for Amazon overall. "When customers opt for these types of products from us," he explained, "they tend to fill larger shopping carts and make purchases more frequently."
The company is also catering to a customer demographic focused on finding bargains and being price-sensitive. Jassy remarked that this behavior aligns perfectly with the advantages offered by Amazon Prime memberships and promotional sales events.
This quarter saw an increase in paid Prime memberships—a development Jassy described as having a "significant impact" on the company's performance.
Understanding Amazon's Budget-Conscious Shoppers
With rising expenses related to homeownership, childcare costs, and retirement savings in the United States prompting consumers to tighten their budgets further—many have begun cutting back across various sectors including dining out and travel plans as well as home renovations.
A recent survey conducted by Wells Fargo between September 5th and October 3rd of 2023 involved over 3,500 adults and teenagers across the U.S. The findings revealed that approximately 67% of participants reported reducing their spending due to economic conditions. Additionally, around 62% indicated they had little left over for discretionary spending after covering monthly bills.
No representatives from Amazon were available for comment when approached by Business Insider outside regular business hours regarding these trends.
Amazingly strong third-quarter results were reported by the company recently; net sales reached $158.9 billion—surpassing analyst predictions which estimated $157.3 billion in sales revenue.
Sales within North America rose by 9% year-over-year totaling $95.5 billion while international sales grew at an impressive rate of 12%, amounting to $35.9 billion.
Net income surged up to $15.3 billion—or $1.43 per diluted share—in Q3 compared with last year's figures which stood at $9.9 billion or $0.94 per diluted share during the same timeframe.
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Following this announcement,
the company's stock
experienced an increase exceeding 6% during volatile after-hours trading sessions despite facing a decline of about 3.3% throughout regular trading hours; nevertheless,
it remains up roughly
23% year-to-date in 2024.
