Amazon's one-day shipping program cuts into Q2 profits

Amazon released its second-quarter earnings July 25, showing that the e-commerce giant missed its profit target due to higher than expected costs for the company's one-day shipping program.

Amazon announced plans in April to invest about $800 million in the second quarter to make  warehouse and delivery improvements supporting its one-day shipping option for Prime members. Amazon's CFO Brian Olsavsky said on the second-quarter earnings call that the costs of those shipping improvements were higher than expected for the quarter. 

In total, Amazon's operating expenses surged about 21 percent to $60.32 billion in the second quarter, largely driven by the investment in shipping speed.

The expenses cut into Amazon's profit margins, ending its record profit streak of four straight quarters, according to CNBC. Amazon reported a net income of $2.6 billion in the second quarter, the lowest net income since the second quarter of last year.

Despite the missed profit estimate, Amazon CEO Jeff Bezos said in a news release that the company received "a lot of positive feedback" and saw  accelerating sales growth as a result of the speedier shipping.

"Free one-day delivery is now available to Prime members on more than 10 million items, and we're just getting started. A big thank you to the team for continuing to make life easier for customers," Mr. Bezos said. 

Read more about Amazon's earnings here

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