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Amazon impressed Wall Street with a big earnings beat and gave yet another sign that its cost cuts are paying major dividends across its fulfillment and delivery network.
Net sales increased 11 percent to $158.9 billion in the third quarter, compared with $143.1 billion in the year-ago period. The sales figures came in a shade ahead of the $157.2 billion expected by analysts polled by LSEG.
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Net income increased to $15.3 billion in the third quarter, or $1.43 per diluted share, well in front of the $1.14 forecast. Profits in the third quarter of 2023 were $9.9 billion, or 94 cents per diluted share.
Two of the tech titan’s lingering cash cows—Amazon Web Services and its advertising segment—grew at 19 percent a piece to $27.5 billion and $14.3 billion, respectively.
CEO Andy Jassy updated investors on the progress of Amazon’s regionalization initiative across its logistics network to get more items to end consumers—and lower the cost in the process.
Jassy said the company has opened more than 15 inbound fulfillment centers in recent months. These warehouses are where Amazon receives products from manufacturers and sellers before shipping them to other fulfillment centers.
“While we’re still relatively early in this re-architecture, we’ve already improved our ability to spread inventory across our fulfillment centers by 25 percent year over year,” said Jassy. “This allows us to have more of the requisite items in fulfillment centers closest to the customer, so we can compile shipments and ship to customers even more quickly.”
Amazon has made “hundreds” of changes to its U.S. inbound network in recent months, saying the company expects these changes will further improve inventory placement, offer faster delivery times, save transportation costs and increase units shipped per box.
Cutting costs at Amazon has been priority number one for Jassy and co. since early 2023.
Fulfillment costs at the e-commerce giant totaled $696 million in the third quarter, down 5 percent from the $732 million spent in the year prior.
And while global shipping costs increased 8 percent to $23.5 billion, that is still less than the 12 percent increase in paid units delivered compared the year prior, illustrating a decreasing cost per shipment.
The cuts enable the Big Tech firm to carry more items for shoppers that are looking to trade down, with Jassy saying in an August earnings call that consumers were exhibiting more cautious spending habits.