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Amazon Grows Sales 28 Percent in North America in Q3

Amazon grew sales in North America by 28% in the third quarter year-over-year. The announcement came a day after eBay revealed a 3% increase in GMV for its US marketplace in Q3. Helping the company was the Prime platform and its army of sellers.

Third-party merchants are approaching the halfway mark when it comes to Amazon unit sales. Chief Financial Officer Brian Olsavsky said worldwide seller units represented 46% of all paid units, up from 42% a year ago. And he continued to beat the drum about the value of its Prime platform.

Amazon’s net sales increased 23% to $25.4 billion in the third quarter, compared with $20.6 billion in third quarter 2014. Excluding the $1.3 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 30% compared to third quarter 2014.

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Net income was $79 million in the third quarter compared with net loss of $437 million in third quarter 2014.

Worldwide paid unit growth was 26%. Worldwide active customer accounts was 294 million, or 272 million excluding customers who had only free orders in the preceding 12 months.

Headcount was up 49% year-over-year, and the company provided a surprising amount of color about the reasons when asked during the post earnings conference call with analysts, given how close-lipped Amazon is usually.

It was primarily in the ops area, explained Investor Relations Director Phil Hardin. If you exclude ops-related employees, the headcount grew slower in the quarter than the FX-neutral growth rate of 30%. In the operations area, Amazon had built 14 net fulfillment centers, bringing the total to 123 globally and 4 new sortation centers, bringing the total US footprint to 23. He also said Amazon was staffing earlier (they’re in good shape for the holidays, and ready to go). And he also said Amazon was doing a lot of conversion of temporary workers to fulltime workers.

An analyst asked about Amazon’s delivery infrastructure, and asked about what was clearly a reference to reports out this week that it could in the future provide logistics and delivery services as a third-party offering.

Hardin said fast delivery options allow it to capture sales that it wouldn’t otherwise, but beyond saying Amazon continued to work on its network around the world, he said he couldn’t respond to any of the rumors and speculation.

While Amazon showed a profit in the third quarter, that isn’t always the case. During the post earnings conference call, Olsavsky used the word “lumpy” quite a bit; the indication seemed to be that they should expect investments across its business to cause fluctuations in profitability. Innovation and investment will continue and can be lumpy over time, he said, but said another dynamic is working on cost reduction and efficiency, “and I think you see a lot of that in this quarter’s P&L (profit and loss statement) and in capital efficiency.”

Investments can ebb and flow, but cost reductions will be a constant presence, as will increasing the customer experience and the shortening of customer delivery.

In responding to a question about the economic drivers of Prime Now, Hardin said in many ways it’s something that Amazon can do that others can’t. “It’s a natural evolution of our 20-year effort to grow our fulfillment center network and our scale.”

An analyst brought up the issue of shipping costs, noting announcements from FedEx and UPS about holiday pricing.

Olsavsky wouldn’t comment on the pricing, but said Amazon’s 23 sortation centers allow it to control a lot more of its shipments for longer. “But we certainly value our relationships with USPS, FedEx, UPS, and other global carriers. And we’re looking forward to a great holiday season.”

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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