Amazon reports record sales in the holiday district

Few companies have seen growth take off like Amazon during the global health crisis. The explosion in online shopping led to record sales of the company, as the e-commerce sector grew by about 50% over the past year, according to some analysts.

Sales in the December quarter received an additional boost from Amazon’s annual “Prime Day” shopping event, from which the company typically earns billions of dollars after it was moved from its regular summer schedule in October due to the pandemic.

Amazon sales for the whole of 2020 have increased by 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 billion and $ 106 billion. Wall Street forecast sales of about $ 95.8 billion. Shares of Amazon increased by more than 1.6% when trading after the program.

The online shopping boom had a broad base. United Parcel Service Inc. said on Tuesday that sales in the December quarter rose 21%. The parcel delivery giant said Amazon accounted for 13.3% of total 2020 sales.

Although the pandemic turned into a sales boom for Amazon, the Seattle company initially tried to meet the growing demand. The company has partially recovered, growing rapidly. It has added more than 500,000 employees, raising its global workforce to more than 1.3 million employees and increasing its level of achievement and logistics by about 50% last year. Last year, it also borne about $ 11.5 billion in Covid-related costs, chief financial officer Brian Olsavsky told analysts on Tuesday. Amazon has also spent about $ 44 billion on the expansion, he said, including in its shipping network.

The efforts seemed to pay off. “There has been a flight to reliability from consumers throughout the year, and this has been especially true during the holiday season, when there have been shipping issues,” said Andrew Lipsman, an analyst at eMarketer. “That’s to Amazon’s advantage.”

Amazon’s other major business, cloud computing services in which the company leases server capacity and software tools, has also seen strong demand during the pandemic, with companies accelerating their digital investments.

While Amazon Web Services was the company’s main profit factor, growth in this segment slowed as rivals such as Microsoft grew. Body.

and Alphabet Inc

Google has been pressured 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. During this period, AWS sales increased by 28% over the previous year to $ 12.7 billion. Amazon is the largest cloud provider in the world. Both it and Microsoft’s No. 2 have seen growth in cloud services accelerate in recent months as companies accelerate their adoption of digital tools.

AWS chief Andy Jassy is set to succeed Mr Bezos as CEO of Amazon in the third quarter of 2021, the company said on Tuesday.

Spending plans for this year, Mr Olsavsky said, are still undergoing a transformation, although the company is likely to make additional investments, in part to ensure Amazon’s cloud computing services can keep up with demand. “We certainly don’t want to run out of capacity,” he said.

Amazon has also built its advertising business, where it competes with companies such as Facebook Inc.

and Google. Amazon said sales in the segment, which 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 earnings season for Big Tech, highlighting how the pandemic has raised those companies’ fortunes while devastating other sectors of the economy. Microsoft recorded record quarterly sales last week, driven by increased demand for video games and the rapid adoption of its cloud computing services. Apple and Facebook have ended their fiscal years with the most profitable neighborhoods of all time.

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

Amazon Flex 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 disclosing the adjustment.

“Although we do not agree that the historical way in which we reported the payment to drivers was unclear, we added additional clarity in 2019 and we are pleased to leave this issue behind,” said an Amazon spokeswoman.

Rep. Ken Buck (R., Colo.), Who criticized other Amazon practices, posted on Twitter“This is a drop in the bucket for Amazon,” he said, adding that “we need to do more to reduce their anti-competitive behavior.”

Employees at one of its Alabama warehouses are also voting on unionization in a move that could reshape the relationship between the company and its workers. Federal regulators in Washington, DC, too, have continued to investigate the retailer’s business practices as part of a comprehensive investigation into the market powers of large technology companies. In addition, Connecticut is investigating how Amazon sells and distributes digital books, and California is looking at how Amazon treats sellers in its online marketplace.

The company also faces questions about rising costs and other issues with some of its businesses. Revenues from physical stores, which include those in the whole food market, fell and fell by 8% in the last quarter as the pandemic changed shopping patterns.

Write to Sebastian Herrera la [email protected]

Corrections and amplifications
Amazon.com is reimbursing tips for drivers detained by the Federal Trade Commission. An earlier version of this article incorrectly called reimbursement a fine. (Corrected on February 2)