Company - - Feb 04,2019
The online shopping giant, Amazon, has predicted lowering expectations in its sales for the opening three months of the year; fear among investors due to speculated slower growth.
It was recorded that Amazon shares dropped nearly 5% in after-hours trading even though the popular online shopping portal delivered the highest sales and profit during the Christmas holiday season.
The company anticipates sales to rise between 10% and 18% during the first quarter, which is slightly lower than specialist forecasts.
The slowdown in expectations came as the firm meets challenges from overseas dealing; changing procedures in markets like India is one of the prominent reasons.
Furthermore, the company even experience amplified competition at home, since rival retailers like Walmart and Target have started investing profoundly in online operations.
According to Neil Saunders, an analyst at GlobalData, the competitors' improvements have hurt the retail division managed by Amazon.
He said, “In our view, the gap between Amazon and the rest is now narrowing". Further, Saunders added, Amazon needs to exert doubly hard in order to achieve “future sales gains”.
Looking at the positive front, Amazon's spreading profits are majorly steered by the evolution of its high-margin businesses such as the cloud, advertising as well as third-party seller services.
It is interesting to know that the cloud computing segment, Amazon Web Services, delivered almost two-thirds of the company’s profit in the last quarter. Presently, it is one among the different services Amazon is depending to counterbalance the decelerating revenue growth spotted in its retail arm.