Amazon is spending billions on shipping as it makes Prime one-day delivery a reality

Amazon’s business tends to oscillate between periods of extreme high-spending and extreme profitability, and the company is now fully in the former. Amazon posted third quarter earnings this afternoon, boasting sales of $70 billion and profit of $2.1 billion. While sales blew past analyst expectations, thanks largely to a record-setting Prime Day, the profit came in far under.

The culprit: higher shipping and other fulfillment costs Amazon is now incurring in its quest to deliver ever more packages at higher frequency. The company said it spent nearly 50 percent more on shipping and fulfillment in the last three months than this time a year ago, up to $9.6 billion. That includes not just the cost of getting the packages to the...

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