Amazon is intensifying its efforts to reduce costs, aiming to provide more products at lower average prices, Amazon CEO Andy Jassy explained to analysts and investors during a conference call on Thursday afternoon.
Jassy emphasized that the company plans to broaden its use of automation and robotics, enhance its same-day delivery network, further regionalize its inbound network, and optimize inventory placement. These strategies are designed to facilitate faster deliveries, increase orders per box, and reduce inventory transfers once items arrive at fulfillment centers.
“These cost improvements won’t occur in a single quarter or one swift move,” Jassy stated, noting that they will require “exceptional execution” from the company, coupled with advancements in technology and process innovation.
His remarks followed the company’s report of lower-than-expected sales for the second quarter, despite nearly doubling its profits. Amazon is facing increased competition from emerging players like Temu and Shein, which offer low-priced products shipped directly from Chinese suppliers, albeit with longer delivery times.
“When we reduce our cost to serve, we can support a wider selection of low-ASP (Average Selling Price) items economically,” Jassy said. Combined with faster delivery, this positions Amazon “as a viable option for a growing range of consumer shopping needs.”
Amazon is reportedly planning to introduce a new storefront with low-priced items and slower shipping, sourced directly from Chinese suppliers, in response to the rise of low-cost competitors. Brian Olsavsky, Amazon’s chief financial officer, refrained from commenting directly on these reports during a media call.
Discussing the company’s quarterly results on the call, Olsavsky pointed out that average selling prices are declining amid cautious consumer spending. He mentioned that unit sales growth was strong during the second quarter, and the acceleration in shipping speeds is driving an increase in the purchase of everyday essentials.
“The competition is fierce,” Olsavsky admitted. “But this competition will benefit everyone. It will set higher standards. We’ve always believed that. There will be many winners, but our focus continues to be on our customers, ensuring they have the best selection, pricing, and convenience.”
