Amazon reports record sales to Holiday Quarter

Few companies have seen it grow like Amazon during the global health crisis. The boom in online shopping turned the company’s sales into record numbers, as the e-commerce sector grew by about 50% over the past year, according to some analysts.

December quarter sales received an additional boost from Amazon’s two-day annual “Prime Day” shopping event, from which the company typically earns billions of dollars, after moving from its programming usual from summer to October due to the pandemic.

Amazon sales for the whole of 2020 rose 38% year-on-year to $ 386.1 billion and are expected to advance again this year. Amazon said sales for the current quarter should be between $ 100,000 and $ 106 billion. Wall Street expects sales of about $ 95.8 billion. Amazon shares rose more than 1.6% in off-hours trading.

The boom in online shopping has been wide. United Parcel Service Inc. said on Tuesday that December quarter sales rose 21%. The package delivery giant said Amazon accounted for 13.3% of total 2020 sales.

Although the pandemic turned into a sales boom for Amazon, the Seattle-based company initially struggled to cope with growing demand. The company recovered in part by growing rapidly. It added more than 500,000 employees, raising its global workforce to more than 1.3 million staff and increasing its level of compliance and logistics by approximately 50% last year. Last year it also accounted for about $ 11.5 billion in Covid-related costs, analyst Brian Olsavsky, chief financial officer, said Tuesday. Amazon also spent about $ 44 billion to expand, he said, including its transportation network.

The efforts seemed to bear fruit. “There was a flight to consumer reliability throughout the year, and that was especially true during the holiday seasons, when there were transportation issues,” said Andrew Lipsman, an analyst at research firm eMarketer . “That favored Amazon.”

Amazon’s other major business, cloud computing services in which the company rents server capacity and software tools, also experienced strong demand during the pandemic, as companies greatly accelerated their investments. digital.

While Amazon Web Services has been the company’s main profit driver, growth in this segment has slowed as its scale and rivals like Microsoft increase. Corp.

and Alphabet Inc

Google has pushed to steal market share. AWS generated just over 10% of Amazon’s total sales in the December quarter, but accounted for more than half of the company’s operating revenue. In the period, AWS sales increased 28% over the previous period to $ 12.7 billion. Amazon is the largest cloud provider in the world. Both he and Microsoft’s No. 2 have accelerated the growth of cloud services in recent months as companies accelerate the adoption of digital tools.

AWS chief Andy Jassy will have to succeed Bezos as CEO of Amazon in the third quarter of 2021, the company said Tuesday.

Expenditure plans for this year, Olsavsky said, are still in the process of transformation, although the company is likely to make more investments, in part to ensure Amazon’s cloud computing services can keep pace. the demand. “We definitely don’t want to run out of capacity,” he said.

Amazon has also been creating its advertising business where it competes with companies like Facebook Inc.

and Google. Amazon said sales in the segment that includes advertising revenue rose 66 percent from a year earlier to about $ 8 billion.

The company’s results are expected to add to a strong profit season for Big Tech, which highlights how the pandemic has raised the fortunes of these companies, while devastating other sectors of the economy. Microsoft last week recorded record quarterly sales driven by rising demand for video games and accelerating adoption of its cloud computing services. Apple and Facebook ended their fiscal years with their most profitable quarters in history.

Amazon’s success has come as the company faces regulatory and labor battles. The Federal Trade Commission said Tuesday earlier that Amazon would pay $ 61.7 million for nonpayment to some Amazon Flex drivers for the full amount of advice they received from customers. The FTC said Amazon addressed the issue in 2019 only after learning of a federal investigation into its practices.

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

“While we disagree with the fact that the historical way we reported paying drivers was not clear, we added more clarity in 2019 and we are pleased to leave this matter,” an Amazon spokeswoman said.

Representative Ken Buck (R., Colo.), Who has criticized other Amazon practices, he tweeted“This means a drop in Amazon’s bucket,” he added, adding: “We need to do more to curb their anti-competitive behavior.”

Employees at one of its Alabama warehouses are also voting on the possibility of unionizing to an extent that could reform the relationship between the company and its workers. And federal regulators in Washington, DC, have continued to investigate the retailer’s business practices as part of an extensive investigation into the market powers of large technology companies. In addition, Connecticut is researching how Amazon sells and distributes digital books, and California is studying how Amazon treats sellers in its online marketplace.

The company also faces questions about rising costs and other issues with some of its businesses. Physical store revenues, which include derivatives from the whole food market, have declined and fallen 8% in the most recent quarter as the pandemic has changed buying patterns.

Write to Sebastian Herrera to [email protected]

Corrections and amplifications
Amazon.com makes a return of the driver’s advice that is withheld from the Federal Trade Commission. An earlier version of this article incorrectly included the payment of the amortization as a fine. (Corrected on February 2)