Amazon is making a concerted effort to lower its costs, aiming to offer more products at a lower average selling price, Amazon CEO Andy Jassy told analysts and investors on a conference call Thursday afternoon.
Jassy said the company will expand its use of automation and robotics, continue to build out its same-day delivery network, further regionalize its inbound network, and strive for better inventory placement. He said this will enable faster speeds, more orders per box, and fewer inventory transfers once items reach fulfillment centers.
“These cost improvements won’t happen in one quarter or one fell swoop,” Jassy said, explaining that they will “take a lot of outstanding execution” by the company, and technology and process innovation.
The comments came after the company reported lower-than-expected sales in its second quarter, even as profits nearly doubled. Amazon is facing growing competition from emerging rivals such as Temu and Shein, which offer low-priced products shipped directly from suppliers in China with longer delivery times.
“When we lower our cost to serve, we can add more low-ASP selection that we can support economically,” Jassy said. Along with faster delivery, this puts Amazon “into the consideration set for increasingly more shopping needs for consumers.”
Amazon is reportedly planning to launch a new storefront with lower-priced items and slower shipping, directly from Chinese suppliers, amid the rise of the low-cost rivals. Brian Olsavsky, Amazon’s chief financial officer, declined to comment directly on those reports in response to a question on a call with reporters.
Addressing the company’s quarterly results on the media call, Olsavsky said average selling prices are declining amid cautious consumer spending. Unit sales growth was strong in the second quarter, he said, and an increase in shipping speeds is prompting growth in purchasing of everyday essentials.
“There’s a lot of competition,” Olsavsky acknowledged. “That competition is going to be good for everyone. It will raise the bar. And we’ve always felt that way. And there’ll be a lot of winners, as well. But our focus remains on our customers, and making sure that they have the best selection, price, and convenience.”
