Author: Karen Weise / Source: New York Times
Demetrius Freeman for The New York Times
SEATTLE — Amazon held off stiffer competition for online shoppers during the holiday season, once again increasing its sales. But the company said on Thursday that growth slowed from its usual breakneck pace — and it came at a cost, with the company spending far more on shipping to win customers.
While strong, the latest quarterly results suggested that Amazon’s retail business not only faces more competition, it is also maturing. The company reported that its revenue from retail sales and services grew 17 percent to almost $65 billion globally, while its shipping costs rose 23 percent, to $9 billion, compared with the same quarter a year ago.
The company is compensating for slowing growth in e-commerce by expanding its fast-moving, highly profitable cloud and advertising businesses. Over all, the company produced a profit of $3 billion in the quarter, up more than 60 percent from the same period a year earlier.
Competition for shoppers over the holidays was intense and expensive, as other big retailers stepped up their promotions. Target offered free two-day shipping, no matter how small an order, and Walmart and others tried to maximize use of their physical stores, an advantage they have over Amazon. On Christmas Eve, Best Buy customers could order products online from store inventory as late as 5 p.m. and pick them up just an hour later.
Amazon pushed back with expanded free shipping to all customers until about a week before Christmas, and made more products eligible for free one-day shipping for Prime members.
But revenue from online shopping slowed, in part because now most of Amazon’s retail sales come from third-party merchants selling on its marketplace rather than from Amazon’s own inventory. Amazon gets only a slice of this revenue.
In addition, the growth of Prime membership, which costs $119 a year, is approaching a plateau. About 56 percent of American…
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