10 ms·

Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

217 points by runesoerensen 9y ago

austenallred 9y ago
Wow. How is that even possible? Growing by a third in one year at that scale is completely mind boggling to me.
- newobj 9y ago
  International, and unclear if subsidiaries like WFM come into play in this?
  - adventured 9y ago
    They note in the release that Whole Foods accounted for $1.3 billion in sales. Excluding Whole Foods sales and favorable exchange rates, growth was 29%.
    - twoodfin 9y ago
      Haven’t followed the numbers closely, so pretty shocked that WF is only pulling in $1.3B/quarter. That means the average American household is spending $3-4/month there. Plenty of room to grow!
      - kgwgk 9y ago
        There is only one month of Whole Foods in Amazon's quarterly results.
      - runako 9y ago
        WF has < 500 stores, slightly more than the number of Apple stores. People will travel further distances to buy an iPhone than perishables. Apple stores also draw in people for repairs, etc. via their online presence (e.g. buy online, pick up in store). WF is 100% in-store. It's astonishing WF is able to generate this level of revenue on so relatively few stores.
  - kgwgk 9y ago
    International was actually a drag (29% compared to North America 35% and AWS 42%) Edit: but I guess I should exclude Whole Foods and in that case North America growth is 28%.
- gyrccc 9y ago
  > Excluding Whole Foods Market and the $124 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 29% compared with third quarter 2016. Still a really impressive 29% without taking WF into account.
- tyingq 9y ago
  It's not far off from their old trajectory: https://ycharts.com/companies/AMZN/revenues https://ycharts.com/companies/AMZN/revenues The Whole Foods acquisition did add a billion, so that helps.
- leggomylibro 9y ago
  Anecdotally, I've started using Amazon FBA for things that I used to use eBay for. Say I want a 2.2" ILI9341-driven TFT screen. That's not exactly something that you need everyday, so I could go to AliExpress/Taobao and get N for $3 ea in ~3 weeks, or eBay to get one for $4-5 in a lottery of anywhere from 3 days to 2 months. But now, I can get one from Amazon for $10 tomorrow. It has prime shipping, which means you gotta figure they use the whole 'Fulfilled By Amazon' thing; I think that's like $3 a pop for small items. Heck, I was thinking of trying to make some money off of that kind of arbitrage, but it wouldn't be stable income since it's so dependent on a single 3rd-party company. Also, you'd literally be profiting off of China's sweatshop factories and lack of compunction around IP, which I feel sort of 'eh' about. At least using the things, you can argue there might be an end to justify the mildly shady means. And it's just as likely to work as one from those other sources. If I wanted ethically-sourced reliable hardware I'd pay like $40 to get one with fast shipping from Adafruit. I really appreciate all that they do, but I also can't afford to ignore price for every purchasing decision that I make - and I am definitely not alone there, so there's probably still a lot of benefit to being "the everything store."
  - ryandrake 9y ago
    Interesting--I've found myself switching the other way recently. I used to do a lot of purchasing on Amazon, but have moved more and more over to eBay. Prices tend to be better there, even on new items. No sales tax. Most sellers now offer free shipping, and you don't have to fill your cart to $50 or whatever it is to get it, and that free shipping isn't the "carried on the back of a mule" speed like Amazon's.
    - sokoloff 9y ago
      Me too. I still buy a fair bit from Amazon, but a lot of my purchasing has moved to Ebay and Aliexpress. It used to be the case that Amazon was very rarely significantly undersold. Starting ~3 years ago, I started to find that Amazon was somewhat frequently undersold by enough that I was willing to wait for Ebay or Ali (or camelcamelcamel to email me an Amazon price drop). I think Amazon's current positioning is more profitable for them and makes me happy as an investor in AMZN, but as a consumer, it makes me Google shop more often than before.
- outside1234 9y ago
  They have no profit. Color me unimpressed.
  - brad0 9y ago
    This is an unconvincing statement. Amazon is known for reinvesting all their revenue back into the company. That’s why their stock price was low for so long.
  - muzani 9y ago
    Increasing expenses by reinvesting it is also a good way to lower taxes.
- eliben 9y ago
  Aren't very high sales for a store expected? They don't manufacture (most) stuff - they buy it for X, sell it for X+Y%, so better economy = more consumer spending = higher sales for stores. The real key for Amazon is how good their profit margins are on these sales.
  - jdale27 9y ago
    Is the economy so much better than last year that everyone is buying 34% more stuff than they did last year?
    - jmknoll 9y ago
      I don't think its the economy being that much better; rather, we're seeing the fruits of mass adoption of e-commerce for everything. Especially in the HN crowd, its easy to forget that e-commerce is still <9% of global retail. And while that number won't go to 100%, its expected to double in the next four years. So given that number alone, we should expect a ~20% YoY increase in revenue from Amazon. 34% is still excellent, but makes a little bit more sense when you frame it in terms of overall sector growth.
  - austenallred 9y ago
    They were a store last year, too.
- psadri 9y ago
  Only ~9% of commerce is online [1]. Amazon will continue to grow like crazy for a while. 1 -https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
  - deleted 9y ago
    [deleted]
- whipoodle 9y ago
  I agree it’s impressive. I’ve been using them as little as possible after a string of delivery mishaps and generally poor service. It’s kind of awful to use these days, in my opinion. But they’re obviously doing something right.
- jldugger 9y ago
  They did buy a whole grocery store, right?
deleted 9y ago
[deleted]
adventured 9y ago
For AWS - 41.7% year over year sales growth (to $4.58b), 44% increase in operating expenses, 36% increase in operating income (to $1.17b).
gok 9y ago
"Operating income decreased 40%"
- kgwgk 9y ago
  Operating margin has collapsed from 1.8% to 0.8% (adjusting for Whole Foods doesn't change the result).
  - gok 9y ago
    If you exclude AWS, it's -2.1%, from -0.9% a year ago
rgbrenner 9y ago
Once again, AWS is the reason Amazon made any money at all. AWS earned $1.1B in profits for the quarter.. a 25% profit margin.
- tdb7893 9y ago
  Hopefully with Microsoft and Google getting in the game we'll get some competition and that margin will reduce
  - davidkuhta 9y ago
    ... or that the margin stays the same, and they're able to further innovate and offer additional value!
  - rajnathani 9y ago
    MSFT also had earnings today. They beat with a (sustained) strong growth in their cloud biz.
  - s17n 9y ago
    Question is whether those companies will culturally be able to compete in a low-margin space. I don't know anything about Microsoft but wrt Google I've often thought that the insane margins on the search ads business have made it institutionally difficult for the company to take any low-margin business seriously. Amazon on the other hand has been all about razor thin margins since day one.
    - sangnoir 9y ago
      > Question is whether those companies will culturally be able to compete in a low-margin space. 25% is a fat margin: why would you say this is a low-margin space?
      - s17n 9y ago
        Post I replied to was imagining a world where margins go down, which seems very plausible, compute is a commodity.
davidkuhta 9y ago
So, how much do they have to spend to stay "zero-profit"?
jedberg 9y ago
That was me and my wife. I'm pretty sure our baby stuff accounts for most of that growth.
- vidarh 9y ago
  Do you know Amazons order page lets you see how many orders you place each year? It is quite telling: 2007, 2008, 2009 were <10 orders. Then 2010, after my son had been born: 41. 2011: 98. 2012: 138. 2016: 270... It's all about establishing the habits.
  - javiramos 9y ago
    Yes! It's all about the customer LTV.
  - mrb 9y ago
    They also have a page to generate CSV reports on your purchases. I noticed the wife and I spent well over $10k in last 12 months. Up 2× or 3× since last year!
    - y4mi 9y ago
      did you use the amazon creditcard? the cashback should dwarf the normal cc rewards...
      - mrb 9y ago
        I didn't know Amazon had a credit card...
    - simonbarker87 9y ago
      Where abouts is that page? Do you have a URL?
      - social_quotient 9y ago
        Here is a url https://www.amazon.com/gp/b2b/reports https://www.amazon.com/gp/b2b/reports What a really great feature and cheers to amazon for having something like this available.
Chris911 9y ago
The stock is up 7.5% in after hours trading.
pfarnsworth 9y ago
Wow. 34%? How does that happen at a company of that scale? That's simply incredible, they are hitting it out of the park like Apple and Google, FANGs are dominating this world at this stage.
0xFFC 9y ago
I am very curious about Wallmart policies against Amazon growth. With this pace amazon will eat Wallmart eventually. And Wallmart is biggest company on earth. What they are going to do?
- bognition 9y ago
  In many ways amazon has already eaten walmart. In what way is walmart the biggest company on the earth?
  - Nelkins 9y ago
    It's the largest company by revenue [1] and employee count [2]. [1] https://en.m.wikipedia.org/wiki/List_of_largest_companies_by_revenue https://en.m.wikipedia.org/wiki/List_of_largest_companies_by... [2] https://en.m.wikipedia.org/wiki/List_of_largest_employers?wprov=sfla1 https://en.m.wikipedia.org/wiki/List_of_largest_employers?wp...
  - sethev 9y ago
    Revenue and number of employees
  - deleted 9y ago
    [deleted]
  - iampims 9y ago
    Headcount I believe.
  - pwinnski 9y ago
    Walmart isn't the biggest company on earth by most means. Last quarter, Walmart reported $31.8B profits on $123.4B earnings. For the similar quarter, Amazon reported $14.5B profits on $38.0B earnings. So Walmart dwarfed Amazon overall. Amazon's fresh results are great, and it helps to close the gap between them, but they are still much smaller than Walmart. Unless you're talking online-only, in which case the comparison switch around, and Amazon is already much bigger than Walmart. But Walmart's online sales are a small percent of their earnings.
- 9y ago
megadethz 9y ago
Amazon is proving to be a vacuum cleaner for inefficiencies in the economy. "Your margin is my opportunity" in another light.
Uehreka 9y ago
rushes to EC2 Instances dashboard Aw shoot, I never actually shut down that P2 cluster!

217 points by runesoerensen 9y ago

austenallred 9y ago

Wow. How is that even possible? Growing by a third in one year at that scale is completely mind boggling to me.

newobj 9y ago
International, and unclear if subsidiaries like WFM come into play in this?
- adventured 9y ago
  They note in the release that Whole Foods accounted for $1.3 billion in sales. Excluding Whole Foods sales and favorable exchange rates, growth was 29%.
  - twoodfin 9y ago
    Haven’t followed the numbers closely, so pretty shocked that WF is only pulling in $1.3B/quarter. That means the average American household is spending $3-4/month there. Plenty of room to grow!
    - kgwgk 9y ago
      There is only one month of Whole Foods in Amazon's quarterly results.
    - runako 9y ago
      WF has < 500 stores, slightly more than the number of Apple stores. People will travel further distances to buy an iPhone than perishables. Apple stores also draw in people for repairs, etc. via their online presence (e.g. buy online, pick up in store). WF is 100% in-store. It's astonishing WF is able to generate this level of revenue on so relatively few stores.
- kgwgk 9y ago
  International was actually a drag (29% compared to North America 35% and AWS 42%) Edit: but I guess I should exclude Whole Foods and in that case North America growth is 28%.
gyrccc 9y ago
> Excluding Whole Foods Market and the $124 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 29% compared with third quarter 2016. Still a really impressive 29% without taking WF into account.
tyingq 9y ago
It's not far off from their old trajectory: https://ycharts.com/companies/AMZN/revenues https://ycharts.com/companies/AMZN/revenues The Whole Foods acquisition did add a billion, so that helps.
leggomylibro 9y ago
Anecdotally, I've started using Amazon FBA for things that I used to use eBay for. Say I want a 2.2" ILI9341-driven TFT screen. That's not exactly something that you need everyday, so I could go to AliExpress/Taobao and get N for $3 ea in ~3 weeks, or eBay to get one for $4-5 in a lottery of anywhere from 3 days to 2 months. But now, I can get one from Amazon for $10 tomorrow. It has prime shipping, which means you gotta figure they use the whole 'Fulfilled By Amazon' thing; I think that's like $3 a pop for small items. Heck, I was thinking of trying to make some money off of that kind of arbitrage, but it wouldn't be stable income since it's so dependent on a single 3rd-party company. Also, you'd literally be profiting off of China's sweatshop factories and lack of compunction around IP, which I feel sort of 'eh' about. At least using the things, you can argue there might be an end to justify the mildly shady means. And it's just as likely to work as one from those other sources. If I wanted ethically-sourced reliable hardware I'd pay like $40 to get one with fast shipping from Adafruit. I really appreciate all that they do, but I also can't afford to ignore price for every purchasing decision that I make - and I am definitely not alone there, so there's probably still a lot of benefit to being "the everything store."
- ryandrake 9y ago
  Interesting--I've found myself switching the other way recently. I used to do a lot of purchasing on Amazon, but have moved more and more over to eBay. Prices tend to be better there, even on new items. No sales tax. Most sellers now offer free shipping, and you don't have to fill your cart to $50 or whatever it is to get it, and that free shipping isn't the "carried on the back of a mule" speed like Amazon's.
  - sokoloff 9y ago
    Me too. I still buy a fair bit from Amazon, but a lot of my purchasing has moved to Ebay and Aliexpress. It used to be the case that Amazon was very rarely significantly undersold. Starting ~3 years ago, I started to find that Amazon was somewhat frequently undersold by enough that I was willing to wait for Ebay or Ali (or camelcamelcamel to email me an Amazon price drop). I think Amazon's current positioning is more profitable for them and makes me happy as an investor in AMZN, but as a consumer, it makes me Google shop more often than before.
outside1234 9y ago
They have no profit. Color me unimpressed.
- brad0 9y ago
  This is an unconvincing statement. Amazon is known for reinvesting all their revenue back into the company. That’s why their stock price was low for so long.
- muzani 9y ago
  Increasing expenses by reinvesting it is also a good way to lower taxes.
eliben 9y ago
Aren't very high sales for a store expected? They don't manufacture (most) stuff - they buy it for X, sell it for X+Y%, so better economy = more consumer spending = higher sales for stores. The real key for Amazon is how good their profit margins are on these sales.
- jdale27 9y ago
  Is the economy so much better than last year that everyone is buying 34% more stuff than they did last year?
  - jmknoll 9y ago
    I don't think its the economy being that much better; rather, we're seeing the fruits of mass adoption of e-commerce for everything. Especially in the HN crowd, its easy to forget that e-commerce is still <9% of global retail. And while that number won't go to 100%, its expected to double in the next four years. So given that number alone, we should expect a ~20% YoY increase in revenue from Amazon. 34% is still excellent, but makes a little bit more sense when you frame it in terms of overall sector growth.
- austenallred 9y ago
  They were a store last year, too.
psadri 9y ago
Only ~9% of commerce is online [1]. Amazon will continue to grow like crazy for a while. 1 -https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
- deleted 9y ago
  [deleted]
whipoodle 9y ago
I agree it’s impressive. I’ve been using them as little as possible after a string of delivery mishaps and generally poor service. It’s kind of awful to use these days, in my opinion. But they’re obviously doing something right.
jldugger 9y ago
They did buy a whole grocery store, right?

deleted 9y ago

[deleted]

adventured 9y ago

For AWS - 41.7% year over year sales growth (to $4.58b), 44% increase in operating expenses, 36% increase in operating income (to $1.17b).

gok 9y ago

"Operating income decreased 40%"

kgwgk 9y ago
Operating margin has collapsed from 1.8% to 0.8% (adjusting for Whole Foods doesn't change the result).
- gok 9y ago
  If you exclude AWS, it's -2.1%, from -0.9% a year ago

rgbrenner 9y ago

Once again, AWS is the reason Amazon made any money at all. AWS earned $1.1B in profits for the quarter.. a 25% profit margin.

tdb7893 9y ago
Hopefully with Microsoft and Google getting in the game we'll get some competition and that margin will reduce
- davidkuhta 9y ago
  ... or that the margin stays the same, and they're able to further innovate and offer additional value!
- rajnathani 9y ago
  MSFT also had earnings today. They beat with a (sustained) strong growth in their cloud biz.
- s17n 9y ago
  Question is whether those companies will culturally be able to compete in a low-margin space. I don't know anything about Microsoft but wrt Google I've often thought that the insane margins on the search ads business have made it institutionally difficult for the company to take any low-margin business seriously. Amazon on the other hand has been all about razor thin margins since day one.
  - sangnoir 9y ago
    > Question is whether those companies will culturally be able to compete in a low-margin space. 25% is a fat margin: why would you say this is a low-margin space?
    - s17n 9y ago
      Post I replied to was imagining a world where margins go down, which seems very plausible, compute is a commodity.

davidkuhta 9y ago

So, how much do they have to spend to stay "zero-profit"?

jedberg 9y ago

That was me and my wife. I'm pretty sure our baby stuff accounts for most of that growth.

vidarh 9y ago
Do you know Amazons order page lets you see how many orders you place each year? It is quite telling: 2007, 2008, 2009 were <10 orders. Then 2010, after my son had been born: 41. 2011: 98. 2012: 138. 2016: 270... It's all about establishing the habits.
- javiramos 9y ago
  Yes! It's all about the customer LTV.
- mrb 9y ago
  They also have a page to generate CSV reports on your purchases. I noticed the wife and I spent well over $10k in last 12 months. Up 2× or 3× since last year!
  - y4mi 9y ago
    did you use the amazon creditcard? the cashback should dwarf the normal cc rewards...
    - mrb 9y ago
      I didn't know Amazon had a credit card...
  - simonbarker87 9y ago
    Where abouts is that page? Do you have a URL?
    - social_quotient 9y ago
      Here is a url https://www.amazon.com/gp/b2b/reports https://www.amazon.com/gp/b2b/reports What a really great feature and cheers to amazon for having something like this available.

Chris911 9y ago

The stock is up 7.5% in after hours trading.

pfarnsworth 9y ago

Wow. 34%? How does that happen at a company of that scale? That's simply incredible, they are hitting it out of the park like Apple and Google, FANGs are dominating this world at this stage.

0xFFC 9y ago

I am very curious about Wallmart policies against Amazon growth. With this pace amazon will eat Wallmart eventually. And Wallmart is biggest company on earth. What they are going to do?

bognition 9y ago
In many ways amazon has already eaten walmart. In what way is walmart the biggest company on the earth?
- Nelkins 9y ago
  It's the largest company by revenue [1] and employee count [2]. [1] https://en.m.wikipedia.org/wiki/List_of_largest_companies_by_revenue https://en.m.wikipedia.org/wiki/List_of_largest_companies_by... [2] https://en.m.wikipedia.org/wiki/List_of_largest_employers?wprov=sfla1 https://en.m.wikipedia.org/wiki/List_of_largest_employers?wp...
- sethev 9y ago
  Revenue and number of employees
- deleted 9y ago
  [deleted]
- iampims 9y ago
  Headcount I believe.
- pwinnski 9y ago
  Walmart isn't the biggest company on earth by most means. Last quarter, Walmart reported $31.8B profits on $123.4B earnings. For the similar quarter, Amazon reported $14.5B profits on $38.0B earnings. So Walmart dwarfed Amazon overall. Amazon's fresh results are great, and it helps to close the gap between them, but they are still much smaller than Walmart. Unless you're talking online-only, in which case the comparison switch around, and Amazon is already much bigger than Walmart. But Walmart's online sales are a small percent of their earnings.
9y ago

megadethz 9y ago

Amazon is proving to be a vacuum cleaner for inefficiencies in the economy. "Your margin is my opportunity" in another light.

Uehreka 9y ago

rushes to EC2 Instances dashboard Aw shoot, I never actually shut down that P2 cluster!