Amazon Sales Reach $332 Billion YTD, Despite Tough Third Quarter Profit Performance

Amazon’s AMZN third-quarter performance might be considered less than stellar with net profit dropping 50% compared to last year. However, sales were up 15% and the year-to-date performance continues to outpace last year. Year-to-date revenue growth is up 28% through September 30 with sales at $332 billion. While profits took a hit in Q3, the long-term strategy that Amazon is implementing will pay off with deeper customer loyalty, more customer acquisitions and a broader distribution network. Net profit through nine-months of this year is up 35%.

Andy Jassy, Amazon CEO, is not concerned with Q3 profit performance and reminded investors that from day one the company has acted in the best long-term interests of its customers. He stated, “We’ve always said that when confronted with the choice between optimizing for short-term profits versus what’s best for customers over the long term, we will choose the latter—and you can see that during every phase of this pandemic.”

Amazon has invested heavily in its fulfillment network which has nearly doubled since the start of the pandemic. According to the earnings release, it plans to continue to incur several billion dollars of additional costs into the fourth quarter in the consumer business as it manages through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs. Jassy stated, “Amazon is doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”

Amazon Web Services (AWS) had significant growth of 39% year over year and continues to be a larger contributor to the consolidated operating income. For Q3, AWS contributed 57% of total operating income and the year-to-date (ending September 30, 2021) contribution is 62%.

Key highlights from the Amazon earnings release are: 

Amazon kicked off the holidays early this year, announcing Black Friday-worthy deals on October 4, including thousands of deals from independent sellers and handmade artisans and Amazon’s biggest ever selection of gift guides. 

The company unveiled its new Holiday Prep Shop, which expertly curates top products across various categories to help customers prepare for seasonal celebrations.

Amazon launched a new gift-giving feature that enables Prime members in the U.S. to use the Amazon mobile shopping app to send gifts with just the recipient’s email or mobile phone number.

Amazon announced it will fund full college tuition, high school diplomas, GED diplomas, and English as a Second Language proficiency certifications for its U.S. front-line employees through its Career Choice program. More than 750,000 operations employees will be eligible for this benefit starting in January 2022.

Recently, Forbes ranked Amazon No. 4 on its 2021 list of World’s Best Employers.