A slowdown in consumer spending has lowered online retailer Amazon’s 2008 revenue projection.

Amazon has lowered its projected revenue from $7.2 billion to between $6 and $7 billion during the fourth quarter. The fourth quarter accounted for 43 per cent of Amazon's annual profit in 2007. Ebay has also predicted a decline in its quarterly sales - the first in its history. The gloomy forecast indicates that the growing financial crisis will affect online retailers in the same way as other retailers. 

Even retail giants such as Wal-Mart Stores have been affected by consumers cutting down on shopping at the time of a growing financial crisis. According to Jeff Bezos, chief executive, Amazon, even though the company would continue to invest in the business, it would do so only cautiously if recession continues for two years.

Wall Street views Amazon as a bellwether for the internet sector. Even though most analysts predicted a decline in the growth of the online retail industry, many did not expect Amazon to lower its revenue projections. Amazon’s projected 2008 sales figure was more than $1 billion short of analysts' estimates of $19.49 billion.

Analysts view Amazon’s cautious outlook as an indicator of a prolonged economic recession. According to them, this could be viewed as setting the stage for the reset of internet assessment and reorganisation for 2009. X

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Los Angeles Times