Net income for the second quarter ending June 30 was US$22 million (£11.9 million), compared with US$52 million (£28.2 million) for the same period last year.
Sales rose by 22 per cent to US$2.14 billion (£1.16 billion).
The group said the decline in operating income was because of price cuts, more free shipping and increased investment in technology and content. It has also invested heavily in its toy business after ending a contract with Toys R Us.
During the quarter the e-tailer launched an online grocery store in the US, offering more than 14,000 dry-goods lines. In Germany, it launched a sports store with branded goods in more than 25 categories.
Amazon said it expects full-year profits to be between US$310 million (£168.4 million) and US$440 million (£239 million), or declines of 28 per cent and 2 per cent growth.
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