Amazon’s Q3 net sales were up 37% to $96.1 billion, once again buoyed by strong customer demand as the pandemic continues to drive ecommerce growth—and the platform prepares its transportation network for an unprecedented Q4.
In a conference call, CFO Brian Olsavsky said the platform saw a continuation of demand trends from Q2 when online grocery sales tripled, although he did not provide much color other than noting Amazon is “reaching more customers” in grocery and its year-over-year (YoY) sales growth in the category continues to accelerate.
“The strong demand and sales growth across our major product categories globally include hard lines, consumables, soft lines and media,” he said.
Olsavsky pointed to “strong Prime member engagement” during the quarter, but did not provide an updated membership figure.
“Prime members continue to shop with greater frequency and across more categories than before the pandemic began,” he added. “They continue to expand their usage of Prime’s digital benefits, including Prime Video.”
In fact, he noted the number of Prime’s 150 million members worldwide who stream Prime Video grew by more than 80% year over year in Q3.
But the biggest headline from Q3 is arguably logistics.
Olsavsky said the platform added 250,000 employees in Q3 and 100,000 more in October to meet heightened demand. Many of these hires are in its transportation network to handle aforementioned customer demand, as well as the expected onslaught of orders during the holiday season.
Per Olsavsky, Amazon plans to grow the square footage of its fulfillment and logistics network by about 50% in 2020, with about half focused on transportation facilities, including sort centers and delivery stations. He hopes this investment will alleviate some of the pressure on third-party couriers—and said Prime Day was a good stress test, which left the platform “[feeling] good about the performance of the network.”
That’s important as third-party sellers once again embrace the platform’s Fulfilled By Amazon (FBA) program, which relies on Amazon itself to ship orders.
“We feel good that we’ve been able to develop that capability a lot this year, because we’ve needed it and we’re going to need it in Q4,” Olsavsky said. “Having said that, it’s going to be tight for everyone. And I think we’ll all be stretched and it’s advantageous … for people to order early this year.”
He also noted there’s a lot of uncertainty surrounding the holidays—including the election, which yielded some order disruptions in 2016.
A bright spot (again): Amazon Advertising. That’s thanks to “very strong advertising performance in Q3,” which includes monetizing additional traffic as “real estate for our advertisers,” Olsavsky said.
Now, Amazon is focused on making its Advertising tools easier to use, including simplifying registration for agencies and marketers, and developing new products—including opportunities in OTT video.
“We’re also very focused on being smarter about surfacing more relevant ads to customers, making display ads easier and then increasing the usability of the Amazon demand side platform,” he added.