Brian Olsavsky, chief financial officer at Amazon, explained to investors during the earnings call that cost-cutting has played a major role in this improvement. “One of the largest drivers of this operating income improvement in the stores business has been reducing our cost to serve, with shipping costs and fulfillment costs growing at a slower pace compared to our unit growth,” he said.
Andy Jassy, CEO of Amazon, also spoke about cost-cutting measures in various units of the company. “We’re encouraged by the progress we’re making on several key priorities, namely lowering our cost to serve in our stores business,” he said.
AI to lower costs
Jassy also discussed how generative AI is helping to lower costs for Amazon. He mentioned that every single one of their businesses inside Amazon has multiple generative AI initiatives in progress. These initiatives range from improving cost-effectiveness and streamlining operations to enhancing the customer experience. Jassy also highlighted that while Amazon is adding numerous customers, they are simultaneously optimizing costs. Speaking about AWS’ revenue, he said, “To achieve double-digit growth on an $88 billion revenue run rate, especially during a year when every company in the world is trying to save as much money as possible, means that we’re acquiring a lot of new customers and workloads.”