Amazon Sales Slow in the Second Quarter as Consumers Look for Discounts

Amazon’s online sales did not do as well as expected in the second quarter. Amazon CFO Brian Olsavsky blamed “cautious” consumers “looking for deals.”

According to a report released by the retailer, online store sales increased 5% to $55.4 billion. This is below online sales growth of 7% in the first quarter.

Competition from discount online retailers Temu and SHEIN are likely eating into Amazon sales. Over the past few years, both retailers have been attracting more and more shoppers by offering lower prices on home goods, electronics, and clothing.

To combat bargain retailers, Amazon is potentially launching its own discount marketplace. The company plans to sell home goods, off-brand fashion, and daily essentials through a separate section of the retail site. Similar to Temu, shipping time for products is expected to take up to 11 days.

Overall, Amazon made $148 billion in net sales for the second quarter, which beat sales of $134.4 in the same quarter last year. Investors earned $1.26 per share, which was better than the estimates of $1.04.

For the third quarter, Amazon expects $154 billion to $158.5 billion in revenue. The estimate was a disappointment for analysts, who predicted $158.43 billion. In defense, Olsavsky noted that third-quarter results will be swayed by consumer distractions like the Olympics and presidential election.

The sweetest spot in the second-quarter report came from the 19% increase in revenue from Amazon Web Services (AWS), making $26.3 billion. The company is attracting new customers to its cloud computing unit by offering an AI platform that can generate applications.

“We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth,” CEO Andy Jassy said.

The news of slowing online sales comes on the heels of new rules issued by the U.S. Consumer Safety Commission (CPSC). Earlier this week, the commission told Amazon that it must contact customers, initiate refunds, and handle recalls for defective goods sold by third-party sellers.