Visualizing Amazon's Rising Shipping Costs – Visual Capitalist


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Most investors would agree that Amazon has been a winner during the COVID-19 pandemic. After all, in two short years from 2019 to 2021, sales soared to $469 billion from $280 billion and their market cap surged towards a $1.7 trillion valuation.
But even the best of companies have had to navigate choppy waters and uncertainty during this time. For Amazon, this has come in the form of cost pressures in their shipping and fulfillment department, which are now representing an increasingly large share of revenues.
Just how large are Amazon’s shipping and fulfillment costs becoming?
In 2021, shipping and fulfillment costs added up to $151.8 billion. Shipping, which includes sortation, delivery centers, and transportation costs amounted to $76.7 billion. Fulfillment costs, which include cost of operating and staff fulfillment centers, were $75.1 billion.
As a result of these trends, Amazon’s shipping and fulfillment expenses now represent 32% of their revenues:

Year Cost as a % of revenue
2021 32%
2020 31%
2019 28%
2018 27%
2017 26%
2016 25%
2015 23%
2014 22%
2013 20%
2012 19%
2011 18%


As you can see, costs are escalating, and today’s figure is almost twice that of the 18% figure seen in 2011.
While these expenses are rising, it’s important to remember that Amazon’s profits are still healthy. They generated $33 billion in profits for 2021. One reason for this is that the majority of Amazon’s profits never came from ecommerce to begin with. Amazon Web Services (AWS), which is a much higher margin segment of their business, accounts for over 50% of their operating profits, but only 13% of their sales.
AWS is such a profit generating machine that prominent investors have called for Amazon to spin off AWS into its own entity. They argue that pure play technology companies are often assigned a higher equity multiple, and spinning off AWS would be accretive to shareholder value.
The $151.8 billion in expenditures towards shipping and fulfillment is absolutely massive. On a per minute basis, this results in $288K per minute in expenses, compared to their $956K in revenue per minute.
Another way to put this gargantuan figure to scale is to remember that this business expense is greater than the equity value of about 90% of all companies in the S&P 500.
Where does this data come from?
Source: Statista
Notes: Fulfillment costs include customer service centers and payment processing costs
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Is $1 million enough to buy you a luxury home? As this infographic shows, the answer varies greatly from city to city.
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“There are three things that matter in property: location, location, location”
Those are words from Harold Samuel, a British real-estate mogul from the 1900s. Broadly speaking, it’s a quote that still holds true—property values in the world’s best cities have always been worth a pretty penny.
The scarcity of real estate is driven by trends such as urbanization, which is the migration of people into cities. While the first examples of cities were built thousands of years ago, it was only recently that the majority of the population began to live in them. In fact, the urban population just overtook the rural population for the first time in 2007.
Of course, certain cities simply hold more appeal for wealthy people, and as a result, competition in the prime real estate market can be fierce.
To learn more about the sky-high cost of prime property in cities, this infographic visualizes data from Knight Frank’s Prime International Residential Index (PIRI 100).
The following table lists the number of square feet that you could buy with one million dollars in various cities. We’ve included more cities on this list than in the graphic to create a more comprehensive comparison.
Monaco, the most expensive city on this list, is incredibly land-constrained with an area of just 0.78 square miles. For context, New York’s Central Park is 1.31 square miles in size.
In second place is Hong Kong, which has become notorious for its difficult real estate market. Just 7% of the city is zoned for residential use, which pushes many of its citizens into sub-100 square feet micro apartments. These housing units offer grim living standards and are often referred to as “coffin homes”.
On the other side of the spectrum, Hong Kong recently set the record for the most expensive home in Asia. A 3,378 square foot penthouse sold for $59 million in 2021, translating to $17,500 per square foot.
You may be wondering what prime real estate is.
Knight Frank defines it as “the most desirable and expensive property in the area, generally defined as the top 5% of the market by value.” This suggests that the prices visualized above are on the upper end of the scale, and that more attainable homes are available.
» If you’re interested in urbanization, consider this infographic which ranks the 20 largest cities in the world.
Where does this data come from?
Source: The Knight Frank Prime International Residential Index (PIRI 100)
With the Ukraine crisis unfolding and rising interest rates on the horizon, investors are moving out of U.S. equity funds.
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Investors are bracing for several interest rate hikes amid a Russia-Ukraine war.
In February, U.S. equity fund flows hit $48 billion, a 70% decline from the year before. In the previous month, U.S. equity fund flows hit their lowest level since the pandemic began.
With data from Morningstar, we show how the invasion of Ukraine and a rising rate environment has affected U.S. equity fund flows.
In January, investors shed a record $23 billion from large growth funds, the highest level since 2017. This trend continued in February as investors sought out lower-risk investments.
Growth stocks historically tend to outperform when interest rates are declining. When the price of capital is low, companies borrow and expand operations at a lower cost.
The reverse is true when rates rise, putting pressure on corporate earnings and equity valuations. In March 2022, the Fed raised interest rates for the first time since 2018.
Growth funds also tend to be more volatile during market selloffs. So far in 2022, the Cboe Volatility Index (VIX) is up more than 40%.
Large blend funds saw the highest inflows, at $38.5 billion, while large cap value funds saw a moderate $15.8 billion in inflows.
Unlike growth funds, value funds tend to outperform when interest rates are rising. Over the last decade, growth funds, marked by low-margins and high valuations have shown stronger performance than value.
Which U.S. equity fund sectors saw the highest inflows and outflows?
Energy, consumer defensive, and natural resources—all typically cyclical, value-skewed sectors—saw the highest inflows at $1.7 billion, $1.0 billion, and $0.8 billion, respectively. Gas prices in the U.S. have hit record prices amid supply pressures from the war.
Meanwhile, investors withdrew $1.9 billion from technology sector funds in February, the highest out of any sector category. Year-to-date, technology sector funds have seen almost $7 billion in net outflows.
As investors veer away from growth sectors, they are flocking to safer assets, like money market funds as the humanitarian crisis in Ukraine unfolds.
Where does this data come from?
Source: Morningstar February 2022 U.S. Fund Flows Report, March 2022.
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