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Amazon Touts Roaring Start for Prime at Whole Foods

Q2 profits soar; sales climb by 39%
WGB Staff

Amazon Prime members have already saved “millions” by utilizing the newly established discounts at Whole Foods stores, Amazon officials said.

“Prime members have adopted this [Whole Foods] benefit; it's one of the fastest rates we've ever seen for a Prime benefit,” Amazon CFO Brian Olsavsky said in a conference call reviewing Amazon’s second-quarter financial results. “They've already saved millions of dollars on everything from seasonal favorites to … popular daily sales.”

The Seattle-based e-commerce giant said sales in physical stores during the quarter ending June 30most of that in Whole Foodstotaled $4.3 billion. Amazon began reporting that segment upon its acquisition of the chain during the third quarter of last year, so there is no comparable figure available. The company said the unit produced $4.26 billion in sales in the first quarter.

Overall, Amazon produced big profits in the quarter, led by its Amazon Web Services division and expansion of its devices to new markets, bolstered by cost controls. Total sales increased 39% to $52.9 billion. Excluding the $760 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 37% compared with second-quarter 2017.

Operating income soared to $3 billion, compared with operating income of $628 million in last year’s second quarter.

Amazon began rolling out Prime benefits to Whole Foods shoppers in May and had expanded to stores nationwide by late June. It provides paid members of Amazon’s loyalty club with a 10% discount on sales items at Whole Foods stores, along with perks such as delivery through Prime Now where available.

Olsavsky described this as the “second wave” of changes Amazon has brought to the Austin, Texas-based natural foods giant since the acquisition, following an initial rollout of everyday lower prices on items and the addition of pickup lockers at stores in the first months of the pairing.

“The invention level is still really high,” he said. “We think it's a big milestone this quarter to launch Prime benefits with Whole Foods, and we'll keep going [to] see how that develops.”

Asked about the recently announced acquisition of the online pharmacy PillPack, Olsavsky said “they're like a lot of the other acquisitions we've done. Recently, we're looking for well-run companies with highly-differentiated customer experience and a real sense of customer obsession that matches ours. So we think PillPack has got all those traits, and we look forward to the deal closing and working with them.”

 

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