Amazon's second quarter 2018 profit jumped to a record US$2.5 billion as its online shopping, cloud computing and advertising businesses kept growing, while revenue grew 39 percent to $US52.89 million for the quarter ended June 30, 2018. Amazon benefited from favorable exchange rates but missed analyst's expectations on sales revenue, according to reports in Associated Press and CNBC news. It was the third consecutive quarter that Amazon surpassed US$1 billion in profits.
The company's physical stores brought in $US4.3 billion, most of which came from its Whole Foods grocery chain. In the second quarter, Amazon rolled out Prime member savings in all Whole Foods stores nationwide, while expanding Whole Foods delivery in more cities, including Chicago, Houston, and San Antonio, CNBC news said. Parts of New York and Florida are next.
By comparison, in 2017 Whole Foods posted second-quarter sales revenue of $3.7 billion and third quarter sales of $3.73 billion, while post-Amazon, fourth-quarter sales rose 4.4 percent, to $3.65 billion, compared with the year-ago period.
LZ Retailytics said that Amazon's second-quarter results and recent Prime Day event demonstrate its continued dominance of the online retail landscape. Total sales jumped 44 percent in North America and 27 percent internationally. "A year after its Whole Foods acquisition, bricks and mortar sales have now reached 8.1 percent of total revenues," LZ Retailytics said.
Amazon CFO Brian Olsavsky said in a conference call that the cloud computing services and advertising businesses were a "big contributor" to its profit growth, helped by better efficiencies in Amazon's warehouses and data centers, and the growth of its higher-margin third-party marketplace.
The advertising unit has become a multi-billion-dollar business, selling ads to companies that want their products to show up first when shoppers search on the website.
"Amazon's total revenue, which includes sales from Whole Foods, increased 39 percent year-over-year. Its North America revenue jumped 44 percent to $32.1 billion, while international sales grew 27 percent to $14.6 billion," Associated Press said.
While its fourth annual Prime Day on July 16 was Amazon’s biggest global shopping event ever, the event was hit by a website outage. The glitch was caused by "larger than expected traffic" to the site, Mr. Olsavsky said.
Members purchased more than 100 million products. The best-selling items worldwide were the Fire TV Stick with Alexa Voice Remote and Echo Dot.
"Small and medium-sized businesses selling on Amazon exceeded $1.5 billion in sales during the Prime Day event. Additionally, Prime members saved millions of dollars at Whole Foods Market with Prime Day deals," Amazon said.
Prime members were offered 10 percent off hundreds of sale items and deep discounts on popular products at WFM.
About 60 million US households have Prime memberships. Prime members in the US spend an average of $1,400 a year on Amazon, compared with $600 for non-Prime members, according to Consumer Intelligence Research Partners.
In August, Whole Foods Market planned to open Houston's first 365 grocery store at the new Yale Marketplace development, the Austin, Texas-based company's 10th 365-branded store nationally.