Richard Soriano
Amazon attributes its weaker revenue forecast to a busy news cycle that is distracting consumers from online shopping. According to Amazon finance chief Brian Olsavsky, high-profile events such as the Paris Olympics and the ramp-up to the U.S. presidential election are diverting consumers’ attention, leading to decreased online spending.
Additionally, the attempted assassination of former President Donald Trump just before the Republican National Convention further captured public focus, impacting shopping behavior.
For the third quarter, Amazon expects revenue between $154 billion and $158.5 billion, which falls short of analysts’ expectations. This guidance, along with a revenue miss in the second quarter, led to a more than 7% drop in Amazon shares during extended trading.
Olsavsky emphasized that consumers have limited attention spans, and significant news events can shift their focus away from shopping.
Beyond distractions from news events, economic challenges are also affecting consumer spending. CEO Andy Jassy noted that shoppers are increasingly cautious, opting for cheaper items and essentials over higher-priced discretionary items like electronics and TVs. This trend contributes to a lower average selling price (ASP) for products sold on Amazon.
Similar trends are observed in other e-commerce companies. Wayfair reported a slowdown in home goods purchases due to inflation and a stagnant housing market, while Etsy CEO Josh Silverman highlighted the tough economic climate for consumers, which is impacting spending across industries.
While Amazon faces short-term revenue challenges, other companies like NBCUniversal are benefiting from the Paris Olympics, generating significant ad revenue. Olsavsky remains optimistic that deferred purchases will eventually rebound, but acknowledges the current difficulties in providing a robust revenue forecast.
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