51% of units sold globally were by marketplace merchants, and AWS had another strong quarter.

Amazon.com Inc. had a headline-grabbing second quarter, both in the news and on its books.

North America’s largest online retailer generated North American net sales of $22.37 billion in the period ended June 30, up 26.6% from $17.67 billion. International sales were up 16.7% and the Amazon Web Services unit grew 41.9%. Sales by marketplace merchants accounted for 51% of unit sales globally, up from 49% a year ago.

Amazon announced plans to buy supermarket chain Whole Foods Market Inc. during the quarter in a deal valued at $13.7 billion. That news sent other supermarket stocks tumbling, at least temporarily. Whole Foods, which reported its Q3 earnings Wednesday, said it had generated $300 million in net income on $12.38 billion in sales for the 40 weeks ended July 2. It provided no commentary on its pending acquisition by Amazon. On the Amazon earnings call Amazon chief financial officer Brian Olsavsky said Amazon is excited about the acquisition, noting “we think they are very customer-centric just like us. We are really glad to join up with them.”

Amazon reported net income of $197 million, down from $857 million a year earlier.

Apart from the Whole Foods surprise, elsewhere during the second quarter Amazon announced nine new U.S. fulfillment centers—three in New Jersey, and one each in Georgia, Connecticut, Colorado, Florida, California and Oregon. It also announced it would make customer loyalty program Prime available to consumers on government assistance programs for $5.99 a month for one year, as opposed to $10.99 monthly for consumers not in an assistance program. Prime is the membership program that provides unlimited expedited shipping to members among other perks such as streaming video and music.

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Amazon does not say how many Prime members it has, however estimates from Consumer Intelligence Research Partners put the U.S. member count in June at 85 million, equal to 67% of U.S. households.

For the quarter ended June 30, Amazon reported:

  • Net sales of $37.96 billion, up 24.9% from $30.40 billion in Q2 2016.
  • North American net sales of $22.37 billion, up 26.6% from $17.67 billion.
  • International net sales of $11.49 billion, an increase of 16.8% from $9.84 billion.
  • Revenue from the sale of goods was $23.75 billion. Revenue from third-party seller services was $7.00 billion, up 37.8% from $5.08 billion. This includes commissions paid to Amazon from marketplace sellers, revenue from Fulfillment by Amazon and other services. Revenue from subscriptions, including Prime fees, was $2.165 billion up 51.3% from $1.43 billion. AWS contributed $4.10 billion in revenue, up 41.9% from $2.89 billion a year ago.
  • Unit sales grew 27%, slightly faster than the 24% in the first quarter of the year.
  • The percentage of unit sales by marketplace sellers on Amazon sites increased to 51% of units sold, from 49% in Q2 2016 and 45% in Q2 2015.
  • Worldwide shipping costs increased 36.0% to $4.57 billion from $3.36 billion. Revenue from the Amazon Web Services unit that provides internet-based data storage and computing power to other organizations increased 41.9% to $4.10 billion from $2.89 billion.
  • Fulfillment costs increased 33.0% to $5.16 billion from $3.88 billion.
  • Marketing costs increased 43.9% to $2.23 billion from $1.55 billion.
  • Technology and content costs increased 43.0% to $5.55 billion from $3.88 billion.
  • General and administrative costs increased 50.7% to $874 million from $580 million.
  • Net income of $197 million down from $857 million a year earlier.

For the third quarter, Amazon projects net sales of $39.25 billion to $41.75 billion.

For the six months ended June 30, Amazon reported:

  • Net sales of $73.67 billion up 23.8% from $59.53 billion in the first six months of 2016.
  • North American net sales of $43.36, up 25.1% from $34.67 billion.
  • Net income of $932 million, down from $1.37 billion.
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