Dive Brief:
- Amazon’s first quarter online store net sales grew 12% year over year to about $64.3 billion, according to a Wednesday release. The e-commerce giant’s physical store net sales increased 5% to $5.8 billion.
- The company’s third-party seller services grew 14% to $41.6 billion and subscription services jumped 15% to $13.4 billion. Amazon’s overall net income, which is inclusive of its cloud-computing division Amazon Web Services, increased 77% to $30.3 billion.
- Amazon expects companywide net sales in Q2 to land between $194 billion and $199 billion, representing year-over-year growth in a range from 16% to 19%. This assumes Prime Day occurs in Q2 versus Q3 last year, with CEO Andy Jassy telling analysts on a call Wednesday that the sales event will take place in most countries this June. Doing this could help Amazon offset some high costs from launching its satellite internet service Leo, William Blair analysts said in an emailed note Thursday.
Dive Insight:
Amazon’s retail operations had a strong performance in Q1, but its cloud-computing division — AWS — continued to shine with higher year-over-year net sales growth of 28%.
“[North American] Retail and International benefited from adding new brands, sharpened pricing, and increasingly faster delivery options,” Telsey Advisory Group analysts led by Joe Feldman said in an emailed note Thursday. “AWS, however, remained the star of the show ... Amazon should continue to gain market share by leveraging its sticky Prime member base, small business relationships, and technological edge. Amazon's ability to fuel key growth opportunities — grocery, private brands, pharmacy, logistics, ads, and generative AI — should make it more valuable.”
The e-commerce company’s customer-facing AI agent, Rufus, had monthly active users growth of 115% year over year and engagement increased 400%, Jassy said on Wednesday’s call.
Sellers particularly in the U.S., Europe and Brazil — where Amazon recently lowered seller fees — saw strong growth in Q1, CFO Brian Olsavsky said on the call.
Jassy emphasized to analysts that the company remains “committed to meeting or beating other retailers on price” and the average price of products offered on Amazon declined in Q1 compared to the same period last year.
That comes after California’s attorney general office last week released mostly unredacted evidence from a lawsuit claiming the e-commerce giant worked with brands such as Levi’s and Hanes to increase prices on products on competitor websites. The lawsuit was first filed in 2022 and claimed Amazon stifled competition, with the newly unredacted evidence outlining email exchanges in which Amazon allegedly pushed vendors to get competitors’ prices to increase.
