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Amazon Breaks Delivery Speed Records and Boosts Margins

Amazon (AMZN) has started fiscal 2024 on a high note, with its net sales climbing 13 percent to $143.3 billion and net income reaching $10.4 billion, or 98 cents per diluted share. 

The e-commerce giant's latest performance has drawn attention to its new generative AI-powered business assistant, Amazon Q, and the resurgence of its Amazon Web Services (AWS) unit, which experienced a 17 percent revenue jump.

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One of the most notable achievements for Amazon was its setting of new records for Prime delivery speeds in the first quarter of 2024. The company reported that over 2 billion items were delivered the same or next day during this period. In major U.S. metro areas, nearly 60 percent of Prime member orders arrived the same or next day, while Amazon achieved a three-out-of-four success rate in delivering items within the same timeframe in cities like London, Tokyo, and Toronto.

CEO Andy Jassy highlighted the company's cost-cutting initiatives, which have led to a record operating margin of 10.7 percent of sales in the first quarter. These efforts have seen Amazon lower its "cost to serve" by more than 45 cents per unit in the U.S. compared to the previous year. Despite shipping 12 percent more units than last year, shipping costs only increased by 10 percent to $21.8 billion.

Jassy's Strategy for Optimization
Jassy emphasized the company's optimization of its network, resulting in an increase in the number of units delivered per box. This consolidation effort has led to fewer boxes and deliveries, enhancing the customer experience, reducing costs, and lowering the company's carbon footprint.

Amazon also unveiled insights into its logistics regionalization initiatives, particularly inspired by its European operations. These initiatives have played a crucial role in driving down costs and improving efficiency.

Future Outlook
Despite its impressive performance, Amazon's second-quarter guidance fell slightly short of Wall Street's expectations. The company expects net sales to grow between 7 percent and 11 percent, reaching $144 billion to $149 billion. Operating income is projected to be between $10 billion and $14 billion.

Overall, Amazon's strong first-quarter results reflect its continued focus on innovation, efficiency, and customer experience, positioning the company for further growth and success in the evolving e-commerce landscape.

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