Amazon’s Third Quarter Net Sales Increased 37% to $96.1 Billion

Boosted by $3.5 billion in Prime Day sales

On Thursday, Amazon released its third quarter 2020 financial results, including net sales of $96.1 billion, a 37% increase year-over-year. This higher sales volume was boosted by Amazon Prime Day sales of $3.5 billion on October 13 and 14. Typically, Prime Day is held in July, but due to the pandemic, Prime Day was postponed in 19 countries. Operating income for the quarter was $6.2 billion, compared to $3.2 billion in Q3 2019. Net income grew to $6.3 billion, or $13.37 per diluted share, compared to $2.1 billion, or $4.23 per diluted share, in the third quarter of 2019.

Comments from founder and CEO Jeff Bezos

In his comments, Amazon founder and CEO Jeff Bezos did not directly address COVID-19, but instead focused on Amazon as a leading employer.

“Two years ago, we increased Amazon’s minimum wage to $15 for all full-time, part-time, temporary and seasonal employees across the U.S. and challenged other large employers to do the same. Best Buy and Target have stepped up, and we hope other large employers will also make the jump to $15. Now would be a great time,” Bezos said.

“Offering jobs with industry-leading pay and great healthcare, including to entry-level and front-line employees, is even more meaningful in a time like this, and we’re proud to have created over 400,000 jobs this year alone. We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” added Bezos.

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Human resource and expansion highlights

Amazon reported the following highlights from human resources and expansions during the third quarter:

  • The company added 100,000 new permanent jobs at $15 per hour with benefits, and 100,000 new seasonal jobs with Amazon Air logistics, fulfillment centers, sortation centers, and globally specialty fulfillment teams in the U.S. and Canada.
  • In Bellevue, Washington, near the company’s Seattle headquarters, Amazon added 10,000 corporate and technology jobs.
  • Amazon added 7,000 new jobs at Tech Hubs in Dallas, Detroit, Denver, New York, Phoenix, San Diego, Toronto and Vancouver.
  • The company added 10,000 new permanent jobs in the U.K. and thousands of permanent jobs in Germany.
  • In India, Amazon announced 10 new fulfillment centers, 5 new sortation centers, nearly 200 delivery stations and more than 100,000 seasonal jobs.
  • Over 320,000 people attended Amazon’s virtual Career Day. Within a week of announcing the event, the company received more than 384,000 applications for jobs in the U.S. and Canada.
  • Amazon has increased in-house testing for COVID-19. By November, the company will have the capacity to perform 50,000 tests daily at 650 sites. More information about the company’s response to the coronavirus can be found on their blog.
  • The company ranked #2 on Forbe’s list of the World’s Best Employers, based on factors like talent development, employer response to COVID-19, gender equality and social responsibility.
Amazon has ramped up its COVID-19 testing at 650 different sites.
By November, Amazon will have the capacity to conduct 50,000 tests daily at 650 different sites. Photo courtesy of Amazon.

Supporting communities around the world

  • Amazon plans to add 3,000 new schools to its Amazon Future Engineer program
  • Amazon donated more than 1 million emergency aid items, including water, generators, air filters, food, KN95 masks and cleaning supplies to community partners who were providing disaster relief to communities impacted by wildfires in California, Oregon and Washington and impacted by Hurricane Laura along the Gulf Coast.
  • Amazon made a $3.5 million donate to its Right Now Needs Fund to support communities in Puget Sound and a new fund was started in Northern Virginia. The money provides students near those Amazon headquarters locations with access to food, shelter, clothing and school supplies.
  • The company has committed millions of dollars in products and financial support to more than a thousand charities in Australia, Canada, China, France, Germany, India, Italy, Japan, Singapore, Spain, the U.K. and the U.S., among others.

Offsetting climate change

In an effort to protect the planet from climate change, Amazon reports the following activities:

  • Six more companies signed The Climate Pledge to become net-zero carbon by 2040: Mercedes-Benz, Best Buy, McKinstry, Real Betis, Schneider Electric and Siemens.
  • Five companies – CarbonCure, Pachama, Redwood Materials, Rivian and Turntide Technologies – received investments from Amazon’s Climate Pledge Fund.
  • In Europe, Amazon plans to add 1,800 electric delivery vehicles from Mercedes-Benz.
  • Rivian has designed Amazon’s first custom electric delivery vehicle. These vehicles will become part of Amazon’s delivery fleet in 2021. The goal is to have 10,000 such delivery vehicles in the U.S. and Europe in 2022 and 100,000 total by 2030.
  • Amazon is identifying products that meet one or more of 19 sustainability certifications and labeling them Climate Pledge Friendly, so customers can easily identify sustainable products when shopping at Amazon.com.
•	Rivian has designed Amazon’s first custom electric delivery vehicle. These vehicles will become part of Amazon’s delivery fleet in 2021.
Rivian’s prototype of Amazon’s electric delivery vehicle. Photo courtesy of Amazon.

Supporting small and medium-sized businesses

Amazon is doing the following to support and empower small and medium-sized businesses:

  • Amazon hosted a virtual Amazon Accelerate event to share best practices with small businesses on how to best serve their customers.
  • The company hosted its second Ignite Digital Festival for over 1,500 digital service partners to showcase product and technology changes.
  • In India, Amazon hosted Stand for Handmade, a 10-week program to help Indian artisans and women entrepreneurs grow their sales.

Other operational highlights

Additional operational highlights for the quarter include:

Amazon launched the Amazon Halo Band and app.
Amazon Halo Band and health and wellness app. Photo courtesy of Amazon.
  • Amazon launched Amazon.se in Sweden, offering more than 150 million products in an Amazon marketplace.
  • The company launched Amazon One, a secure, contactless payment system used in two Amazon Go stores in Seattle.
  • Amazon Prime Video premiered new and returning Amazon Originals including The Boys, Breathe into the Shadows, Bandish Bandits, Mirzapur, Putham Pudhu Kaalai, Peep Time, Documental S8, Pan y Circo, and All or Nothing: Tottenham Hotspur.
  • Amazon Prime Video will make live international rugby games exclusively available to UK’s Amazon Prime customers, including the Autumn Nations Cup.
  • Amazon Music is partnering with Amazon-owned Twitch to add livestreaming to the Amazon Music app.
  • Amazon announced the launch of Prime Gaming. Prime Gaming is included with Prime memberships and Prime Video subscriptions in over 200 countries and territories.
  • The company launched new products including updated Echo and Fire TV devices and upgrades to Alexa.
  • Over 100 million smart home devices are now connected to Alexa.
  • Amazon launched Halo, a health and wellness app, that works with the Halo Band, similar to a smartwatch like Fitbit.
  • Amazon Web Services has partnered with Global Payments, Moderna, Jack in the Box, NFL and Best Western.

Financial guidance for fourth quarter

The company issued the following guidance for the fourth quarter of 2020:

  • Net sales between $112.0 billion and $121.0 billion, representing growth of 28% and 38% year-over-year
  • Operating income between $1.0 billion and $4.5 billion, compared to $3.9 billion in Q4 2019

The guidance presumes no acquisitions, legal settlements or other material changes to Amazon’s business during the fourth quarter.

Insider Take

If you are still reading, wow, what a quarter! Amazon continues to forge ahead despite how the pandemic has affected the world and its business. After some early concerns about how Amazon was addressing worker safety, Amazon seems to have put into place many new safety precautions. They have also helped the communities where they do business when they were in need. This includes providing jobs in a time when jobs are hard to come by.

The company’s fourth quarter results will build on the success of Amazon Prime Day with the company launching its Holiday Dash Deals early. Like other retailers, they want to avoid the shopping rush that typically occurs after Thanksgiving. Our world has changed, and so have our shopping habits. Amazon is trying to encourage shoppers to get their shopping orders in early to ensure timely delivery and to space out the work. Their early deals will help them with that while also pushing the competition to step it up too.