Amazon warns of soaring supply chain costs as profits halve

Amazon recorded net income of $3.2bn (£2.3bn) in the third quarter to September 30, down from $6.3bn (£4.6bn) last year, and said it would spend billions in additional costs over the golden quarter. The online giant posted net sales up 15% to $110.8bn (£80.4bn) in the quarter. 

Chief executive Andy Jassy, who succeeded Amazon founder Jeff Bezos in the role earlier this year, maintained the etailer will do “whatever it takes” to serve customers.

He said: “We’ve always said that when confronted with the choice between optimising for short-term profits versus what’s best for customers over the long term, we will choose the latter — and you can see that during every phase of this pandemic.

”Customers have appreciated this commitment… but it’s also driven extraordinary investments across our businesses to satisfy customer needs — just one example is that we’ve nearly doubled the size of our fulfillment network since the pandemic began.

”In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues and increased freight and shipping costs — all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season.

”It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”

The whole retail industry has faced supply chain challenges and labour shortages in recent months.