Amazon said its shoppers keep choosing cheap items – and that’s good for business

Amazon website displayed on a laptop screen.

Amazon customers are buying cheaper products, but at a higher volume.

“At a time when consumers are being careful about how much they spend, we’re continuing to lower prices and ship even more quickly, and we can see this resonating with customers as our unit growth continues to be strong and outpace even our revenue growth,” Andy Jassy, Amazon’s CEO, said in an earnings call on Thursday.

Customers are increasingly using the platform to buy cheaper everyday household items, like “health, beauty, and personal care as well as nonperishable grocery,” Brian Olsavsky, Amazon’s finance chief, said in the call.

While these items “often have a lower average selling price,” Olsavsky said that these buying patterns are still a net positive for Amazon.

“We see that when customers purchase these types of items from us, they build bigger baskets, shop more frequently, and spend more on Amazon,” Olsavsky said.

Amazon is also dealing with a customer base that’s “looking for deals” and “price conscious,” Jassy said.

He said this consumer behavior “matches up well” with Amazon’s Prime membership and sales events.

Paid Prime memberships have gone up this quarter, Jassy added, which has been “hugely impactful” for Amazon.

Amazon’s cost-conscious customer base

Amid the high cost of homeownership, childcare, and retirement, US consumers have been saving more and cutting back on everything from food and travel to home improvement.

Wells Fargo carried out a survey from September 5 to October 3, 2023, of more than 3,500 US adults and teenagers. Around 67% of respondents said they had slashed their spending due to the economy. And 62% of the survey’s respondents said they had little left for “extras” after paying their monthly bills.

Representatives for Amazon did not respond to a request for comment from B-17, sent outside business hours.

Amazon reported strong third-quarter earnings on Thursday. Its net sales for the quarter hit $158.9 billion, outperforming analyst expectations of $157.3 billion.

Its sales in North America increased 9% year over year to $95.5 billion. Its sales internationally increased 12% year over year to $35.9 billion.

Its net income increased to $15.3 billion — or $1.43 per diluted share — in Q3, compared with $9.9 billion, or $0.94 per diluted share, in the same period last year.

The company’s stock climbed more than 6% in after-hours trading after results were announced. The stock is up about 23% so far in 2024.