Amazon Expects Strong Q3 Growth Driven by Robust Cloud Sales and Changing Shopping Patterns in Canada

Despite recent headwinds in the cloud-computing market, Amazon‘s AWS division saw its sales growth stabilize in the second quarter. The company’s investment in “cost optimization” paid off as businesses once again embraced the cloud, providing a boost to AWS. While Amazon‘s growth in cloud sales was more modest compared to competitors like Alphabet and Microsoft, analysts believe that the positive results indicate the company’s ability to hold its own in the market.

Amazon‘s CEO, Andy Jassy, highlighted the company’s investments in AI, particularly generative AI, which has the potential to create new text, images, and other content from past data. Jassy noted that every business unit within Amazon is working on generative-AI initiatives, both customer-facing and cost-slimming efforts. The company has allocated a significant amount of its capital investments for 2023 toward this technology. However, it is yet to be seen how much Amazon‘s cloud division can benefit from powering businesses’ AI demands.

In the retail sector, Amazon‘s success has been driven by the reorganization of its fulfillment network and the opening of warehouses for same-day shipping, which has saved time and costs on delivery. The company’s chief financial officer, Brian Olsavsky, noted that faster delivery speeds have led to increased shopping frequency among Prime loyalty customers. While consumers have been cautious with discretionary spending in recent months, indications suggest healthier consumer sales for the back half of 2023 both within and outside of Amazon. The company’s recent marketing blitz for loyalty shoppers, Prime Day, is expected to drive a significant boost in sales.

Amazon aims to significantly increase its gross business-to-business e-commerce sales, targeting a jump from $35 billion to $100 billion annually. The company has been implementing cost-cutting measures, including layoffs affecting around 9% of its workforce, to streamline operations and increase efficiency. Amazon also continues to seek cost reductions at its Amazon Fresh stores and refine its grocery strategy.

Canadians looking to take advantage of Amazon‘s retail success and competitive pricing should consider becoming Prime loyalty customers. Prime members enjoy faster delivery speeds and access to exclusive deals like Prime Day. Additionally, with the revival of consumer sales and a focus on value shopping, Canadian shoppers can expect to find attractive prices both within and outside of Amazon. It is advisable to compare prices across different online platforms and retailers to ensure the best value for money. Canadians can also support local businesses and the Canadian economy by shopping from domestic retailers and small businesses.

Amazon‘s strong performance in the second quarter of 2023, fueled by resilient cloud sales and favorable shopping trends, has exceeded expectations and instilled confidence in the company’s ability to compete in the market. With a focus on cost optimization and investments in AI technology, Amazon is well-positioned for future growth. Canadian consumers can expect increased convenience and competitive pricing as they navigate the retail landscape, and they have the power to support both local businesses and the Canadian economy.

This report was written by for The New York Times on August 4, 2023.