Amazon reports record sales in holiday quarter

Few companies have seen growth like Amazon during the global health crisis. According to analysts, the explosion in online shopping has pushed the company’s sales to record numbers as the e-commerce sector has grown by about 50% over the past year.

Sales in the December quarter received an extra boost from Amazon’s annual two-day “Prime Day” shopping event – from which the company typically earns billions of dollars – after being moved to October due to the pandemic of its regular summer schedule.

Amazon’s full-year sales rose 38% year-on-year to $ 386.1 billion and are expected to increase again this year. Amazon said sales for the current quarter should be between $ 100 billion and $ 106 billion. Wall Street predicted sales of about $ 95.8 billion. Shares in Amazon rose more than 1.6% in after-hours trading.

The boom in online shopping was wide. United Parcel Service Inc. said Tuesday that sales in the December quarter rose 21%. According to the package series, Amazon accounted for 13.3% of its total sales in 2020.

Although the pandemic became a selling point for Amazon, the company in Seattle initially struggled to cope with rising demand. The company partially recovered by rapidly scaling up. It added more than 500,000 employees, increasing its global staff to more than 1.3 million staff and increasing its fulfillment and logistics square footage by about 50% last year. It also incurred about $ 11.5 billion in Covid-related costs last year, CFO Brian Olsavsky said on Tuesday during a call to analysts. Amazon has also spent about $ 44 billion to expand, including on its transportation network.

The efforts apparently paid off. “There was a flight to consumer reliability during the year, and this was especially the case during the holiday periods where shipping originated,” said Andrew Lipsman, an analyst at research firm eMarketer. “The Beneficiary Amazon.”

Amazon’s other big business, the cloud computing services in which the company rents server capacity and software tools, also had strong demand during the pandemic, with companies accelerating their digital investments in general.

While Amazon Web Services was the company’s biggest profit driver, growth in the segment slowed as its scope increased and competitors such as Microsoft Corp.

in Alphabet Inc.’s

Google has insisted on stealing market share. AWS accounted for just over 10% of Amazon’s total sales in the December quarter, but accounted for more than half of the company’s operating revenue. During the period, AWS sales increased by 28% from the previous year to $ 12.7 billion. Amazon is the world’s largest cloud provider. Both Microsoft and second place have seen growth in cloud services increase over the past few months as companies accelerate digital instruments.

The AWS chief, Andy Jassy, ​​will be in the third quarter of 2021 mr. Bezos succeeds Amazon as CEO, the company said Tuesday.

The spending plans for this year, Olsavsky said, are still ongoing, though the company is likely to make further investments, in part to ensure Amazon’s cloud computing services can keep up with demand. “We definitely do not want to run out of capacity,” he said.

Amazon is also building its advertising business where it competes with companies like Facebook Inc.

and Google. According to Amazon, sales in the segment that includes advertising revenue increased by 66% over the previous year to about $ 8 billion.

The company’s results are expected to contribute to a strong earnings season for Big Tech, highlighting how the pandemic has increased the prosperity of the companies while devastating other sectors of the economy. Microsoft drove record quarterly sales last week due to increased demand for video games and the faster use of its cloud computing services. Apple and Facebook ended their financial year with their most profitable quarters ever.

The success of Amazon came while the company was struggling with the regulatory and labor battles. The Federal Trade Commission said earlier Tuesday that Amazon would pay $ 61.7 million due to the fact that its Amazon Flex executives would not pay the full amount of tips they received from customers in the past. The FTC said Amazon only addressed the case in 2019 after learning of a federal investigation into its practices.

Managers of Amazon’s Flex program use their own vehicles to deliver packages for the e-commerce giant. The FTC said Amazon had changed the terms for driver payments without announcing the adjustment.

“While we do not agree that the historical way in which we endorsed the drivers to drivers is not clear, we gave extra clarity in 2019 and are pleased that we can put this matter behind us,” a Amazon spokesman said .

Rep. Ken Buck (R., Colo.), Who criticized other Amazon practices, tweeted, “It’s a drop in the bucket for Amazon” and added, “We need to do more to curb their competitive behavior.”

Employees at one of his warehouses in Alabama are also voting on whether they should unite in a move that could reform the relationship between the company and its workers. And federal regulators in Washington, DC, went on to examine the traders’ business practices as part of a broad investigation into the market forces of large technology companies. In addition, Connecticut explores how Amazon sells and distributes digital books, and California explores how Amazon treats sellers in their online marketplace.

The company also has questions about rising costs and other issues with some of its businesses. Revenue from physical stores, which includes the entire food market, declined in the most recent quarter and fell by 8% as the pandemic changed the store pattern.

Write to Sebastian Herrera by [email protected]

Corrections and reinforcements
Amazon.com is making a refund of driver tips he withheld from the Federal Trade Commission. In an earlier version of this article, the refund is incorrectly called a fine. (Corrected on February 2)