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Amazon revenue rises 9%: Ecommerce sales fall 2% in Q4

Amazon earnings

Amazon.com Inc. reported fourth-quarter total sales of $149.20 billion, a 9% jump from a year earlier. Ecommerce sales dropped 2% year over year to $64.53 billion in Q4 2022. For the full year of 2022, ecommerce sales fell 0.3%.

Amazon’s total sales include its own product sales, sales from its marketplace, as well as marketplace seller fees, advertising fees and revenue from Amazon Web Services (AWS).

Amazon revenue breakdown

AWS generated $21.38 billion in sales. The cloud-computing division is the company’s largest source of income. That’s a 20% increase from a year earlier. But that 20% increase is the slowest growth rate reported since Amazon began breaking out the segment.

In a call with journalists, chief financial officer Brian Olsavsky warned that AWS growth would slow in 2023.

“We realize everyone’s trying to cut their budgets — we are in our main Amazon business, in our infrastructure as well,” Olsavsky said. “We do expect to see some slower growth rates for the next few quarters.”

“The expected deceleration in AWS was even worse than expected and means Amazon can’t rely on that business units’ operating profits as much in coming quarters,” Andrew Lipsman, an analyst at Insider Intelligence, told Bloomberg News.

Amazon’s net income decreased to $278 million, compared with $14.3 billion in the fourth quarter of 2021. Amazon attributed the swing to a pre-tax valuation loss of $2.3 billion from its investment in Rivian Automotive, Inc., which makes electric vehicles.

For the year ending Dec. 31, Amazon reported a net loss of $2.7 billion. That marks the worst annual loss since the retailer went public in 1997.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Operational changes at Amazon

Amazon has made several moves in recent weeks to cut its operating costs, most notably by laying off thousands of workers from its ecommerce unit. In early January, CEO Andy Jassy said planned job reductions totaled 18,000 workers — a full 1% of Amazon’s workforce — and well above earlier expectations that Amazon would slash 10,000 jobs.

Additionally, Amazon is seeking to sublease millions of square feet of underused warehouse space. 

In a statement announcing Q4 earnings, Jassy said he was “encouraged by the continued progress we’re making in reducing our cost.” He noted that the company remained “quite optimistic about the long-term opportunities for Amazon.”

The drop in ecommerce sales in Q4 marked the fourth such decline in the most recent five quarters.

Revenue from third-party seller services — which include commissions, shipping services and other fees that Amazon collects from sellers on its marketplace — jumped 20% to $36.36 billion. in Q4.

First-quarter guidance on Amazon revenue

Seattle-based Amazon said it expects sales in the current quarter to reach between $121 billion to $126 billion, keeping in line with analysts’ estimates.

Other news from the fourth quarter

Amazon now allows Buy with Prime merchants to display customer reviews from Amazon.com within their own online stores. The retailer also announced an integration with BigCommerce, an ecommerce platform, that will help merchants easily enable Buy with Prime on their storefronts with no coding required.

Amazon launched RxPass, a new Prime membership benefit from Amazon Pharmacy that offers unlimited eligible prescription medications for $5 per month, including free shipping.

For the fourth quarter, Amazon reported

For the year ending Dec. 31, 2022, Amazon reported

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this report.

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