Apr 25, 2019

Amazon gets speedier with free 1-day shipping for Prime

An Amazon fulfillment center. Photo: Paul Hennessy/NurPhoto via Getty Images

Amazon is beefing up its Prime membership offering, moving from free 2-day shipping to 1-day.

Why it matters: Retailers are already racing to come close to Amazon's shipping prices and speeds. This will squeeze competition even further.

Context: Amazon has over 100 million Prime members in just the U.S., and there are currently about 100 million products on its site that are eligible for free 2-day shipping.

Details: CFO Brian Olsavsky told analysts the company expects the offering to cost $800 million in the second quarter. He said he expects the move to make Prime even "stickier." Cutting delivery times in half "will open up a lot of potential purchases," Olsavsky said.

The big picture: Amazon reported $7.09 in earnings per share for the first quarter of 2019, plowing through analysts' expectations of $4.72.

  • The e-commerce behemoth saw $59.7 billion in sales this quarter — a 17% jump from Q1 2018.
  • Revenue for its cloud business, AWS, was $7.7 billion. Both revenue figures were in line with analysts expectations.

What's happening:

  • Amazon saw fatter profit margins this quarter, leading to stronger than expected earnings per share. The company reported a record $3.6 billion in net income — more than double last year's $1.6 billion.
  • AWS profits were $2.2 billion, up about 57% from $1.4 billion last year.
  • Amazon also shrunk its losses internationally and doubled operating profits in North America, per the earnings release.

Go deeper

Scoop: Top NSC official reassigned to Energy Department amid "Anonymous" fallout

Photo: Mark Wilson/Getty Images

Deputy national security adviser Victoria Coates will be reassigned as a senior adviser to Energy Secretary Dan Brouillette, the National Security Council said Thursday — and a senior White House official said that the administration "rejects" the rumors that she is "Anonymous."

Why it matters: Coates has battled claims that she is the still-unknown Trump administration official that penned a New York Times op-ed and book critical of President Trump.

The Fed may be setting the table for 2020 rate cuts

Illustration: Sarah Grillo/Axios

The Fed looks to be laying the groundwork to lower U.S. interest rates this year, just as they did in April 2019 before cutting rates in July, September and October.

Why it matters: A Fed rate cut makes taking on debt more attractive for U.S. consumers and businesses, helping to juice the economy, but also puts the central bank in a weaker position to fight off a potential recession.

Morgan Stanley to buy E*Trade in a $13 billion deal

Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Morgan Stanley is planning to buy E*Trade Financial Corp. in a $13 billion all-stock deal, the Wall Street Journal reports, with plans to acquire the company known for helping everyday Americans manage their money.

Why it matters: The deal, which would be the largest by a major American bank since the financial crisis, signals Morgan Stanley‘s desire to bulk up in wealth management.