Amazon raises price of Prime membership despite soaring profits

Amazon’s profits in the fourth quarter nearly doubled despite the online giant facing surging costs linked to a snarled supply chain and labour shortages.

The company, based in Seattle, also raised its annual Prime membership fee on Thursday to 139 dollars (£102) per year from 119 dollars (£88). This is the first time Amazon has raised the price since 2018.

Shares of Amazon rose nearly 17% in after-market trading.

“As expected over the holidays, we saw higher costs driven by labour supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” said Amazon CEO Andrew Jassy, who succeeded founder Jeff Bezos in the role last July.

“Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

Mr Bezos is now executive chairman.

Amazon was one of the few retailers that prospered during the Covid-19 outbreak. As physical stores selling non-essential goods temporarily or permanently closed, homebound people turned to Amazon for everything from groceries to cleaning supplies.

But growth has slowed as newly vaccinated Americans feel comfortable going out. And the company, like many others, are dealing with global supply chain issues and shortages of workers.

Amazon’s chief financial officer Brian Olsavsky estimated Amazon incurred about 4 billion dollars in costs related to supply chain issues and labour issues. And he said that the surging Omicron variant resulted in workers calling in sick, hurting productivity.

Still, the company reported a profit of 14.32 billion dollars (£10.53) for the three-month period ending on December 31 2021.

Meanwhile, sales at Amazon’s cloud-computing business, which helps power the online operations of Netflix, McDonald’s and other companies, grew 40% in the quarter.

Amazon faces attempts by workers to unionise. Workers at a company warehouse in Bessemer, Alabama, organised by the Retail Wholesale and Department Store union, will begin voting on Friday on whether to unionise the facility.

The poll comes two months after the federal labour board declared Amazon unfairly influenced the election last year.

The company has also been fighting a separate attempt by workers in a New York City facility, where last week the nascent Amazon Labour Union lined up enough support to vote on whether to unionise.