Description: Amazon profits fell in the latest quarterly results. The decrease has come from Amazon’s efforts to deliver parcels even faster for its Prime customers. Looking for one day delivery to Amazon Prime members is causing problems for Amazon. An analyst said the average one day order is for only $8.32. The problem is it costs Amazon $10.59 for shipping and handling.

Date:  October 24, 2019

Source:  nytimes.com

Link: https://www.nytimes.com/2019/10/24/technology/amazon-earnings.html

Discussion points: 

1) Were you aware that Amazon was making most of its profits from its cloud services rather than retail side of the business?

2) Has anyone in your class become a Prime member? Do you think the additional services are worth the annual fee?

3) Starting on page 227 of Wiley’s Managerial Accounting: Tools for Business Decision-Making you can read a section on Cost-Volume-Profit Analysis. Given what we know about Amazon’s costs for these one-day delivery transactions to Prime members, how do you think the managerial accountants at Amazon may have weighed in on these decisions to further decrease shipping times?