Amazon pulls in record $2.9B
Prime Day problems blamed for missed expectations
Amazon.com sales climbed nearly 30 percent, to $56.6 billion, in the third quarter, the technology giant announced Thursday, but missed expectations despite its broadly popular discount event, Prime Day.
Still, the company brought in a record $2.9 billion in profit — compared with $2.5 billion in the second quarter. The company’s stock price closed up 7 percent on Thursday, at $1,782.17, but plunged in after-hours trading to $1,668.01 a share.
“Amazon Business is adding customers rapidly, including large educational institutions, local governments and more than half of the Fortune 100,” Jeff Bezos, Amazon founder and chief executive, said in a statement. “These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control.” (Bezos also owns The Washington Post.)
In July, Amazon hit a record $2.5 billion in quarterly profit. Much of that growth was driven by AmazonWeb Services, the company’s cloud-computer business, which reaped in $6.1 billion in sales. Amazon’s advertising business also churned $2.2 billion in the second quarter— more than double one
year before.
Prime Day was created four years ago and quickly boomed to become Amazon’s largest sales day of the year. The bonanza brings in billions in sales for the company but was dogged by website glitches and worker strikes this year. Nearly 1,800 Amazon workers in Spain went on strike that day, joining a chorus of thousands of other workers calling for better conditions, pay and health benefits. The labor protests mounted scrutiny on the company’s hiring and labor practices as Amazon looked to add thousands of warehouse jobs to keep pace with its massive growth.
Amazon’s Prime membership program, for which users pay $119 a year, has more than 100 million members worldwide. Though Amazon has largely kept specific metrics on the program under wraps, some have raised the possibility that the Prime member count may be reaching a saturation point as there are fewer and fewer Americans left to reach.
Also on Prime Day, which was July 16, the sale compromised Amazon’s website almost immediately. Amazon’s site andmobile app crashed for about 45 minutes, leaving customers with a message that read: “UH- OH. Something went wrong on our end.”
Cooper Smith, head of Amazon research at Gartner L2, a firm which benchmarks brands’ digital performance, noted that before Thursday, Amazon had posted two consecutive quarters of tripledigit growth in advertising. Amazon’s breakneck advertising expansion, just behind Google and Facebook, poised the company to report strong thirdquarter earnings — especially when combined with the boon from Prime Day.
“We see Q3 as a standout quarter for Amazon and for product sales, largely because of Prime Day,” Smith said.
Smith said it remained to be seen how Amazon would tackle its international growth, particularly in markets it is just beginning to enter, like Brazil. Any concerted international efforts would clarify Amazon’s plans to compete with the likes of Walmart, for example, which bought a 77 percent controlling stake in the Indian retailer Flipkart for $16 billion earlier this year — snapping up 100 million customers in one transaction.