Amazon handily exceeded earnings estimates in its fiscal third quarter on the strength of a 37% revenue increase driven by continued pandemic-related demand that included progress in grocery despite an apparent slowdown in traffic, if not sales, at Whole Foods Market, officials said.
The Seattle e-commerce giant said sales in the period ending Sept. 30 totaled $91.6 billion, with net earnings soaring to $6.3 billion. Analysts had estimated sales would come in at $92.7 billion.
Brian Olsavsky, Amazon’s chief financial officer, in a conference call discussing results said the company was “reaching more customers with our grocery offerings,” citing unspecified year-over-year growth of online grocery sales sparked in part by expanded availability of delivery—and the recent addition of pickup of orders made online—at its owned Whole Foods Market stores.
Amazon counts sales conducted online but fulfilled from Whole Foods in its “online stores” category. That division saw sales grow by 37% to $48.4 billion in the quarter. However, sales at the company’s physical stores division—which consists of product sales where customers physically select items in a store—declined by 10% year over year to $3.8 billion.
Whole Foods stores account for the vast majority of this figure, although a handful of other physical stores, including bookstores, Four-Star stores and the company’s Amazon Go concepts, are also included in physical store sales.
The physical stores division has now posted sales declines in four of the last five quarters, including a 13% drop in the second quarter when the coronavirus abruptly altered shopper behaviors—and sparked a new rise in digital fulfillment. These figures support some measures of physical store traffic, including a report from InMarket, which said total visits to Whole Foods were down by 40% in the quarter as a result of the pandemic.
A separate recent study from Placer.ai said visits to Whole Foods Market stores were down by 33.2% over the past six months, supporting the notion that “one-stop shops” such as conventional supermarkets were better positioned to absorb changes in consumer behavior associated with the pandemic, including shopping less frequently but with bigger average baskets including a variety of basic ingredients and home goods, from store locations close to their homes.
Amazon’s Prime Day event in early October helped to spark a rise in traffic, InMarket added, although it occurred after the second-quarter period ended.
Olsavsky during the conference call noted that investments to bolster Amazon’s grocery fulfillment capacity was “pulled forward” so as to meet increased pandemic demand.
“When things open up a bit more and there’s more store options for people to buy from, there will be leveling of volume back to the stores, I would imagine,” he said.
This story was updated from a previously published version to correct an error in the cited Placer.ai data.