Amazon’s revenue leaps 29% in Q3

 BY ALLISON ENRIGHT Editor

50% of units sold on Amazon globally were by marketplace sellers. It is the first time goods sold by marketplace sellers have reached that mark.

Amazon.com Inc. global revenue grew strongly in Q3, rising 29% from a year ago, North America’s No. 1 e-retailer reported today.

Worldwide net sales across all its businesses totaled $32.71 billion, up 29.0% from $25.36 billion a year ago. Products sold by marketplace sellers accounted for 50% of units sold. It is the first time goods sold by marketplace sellers have reached the 50% mark. A year ago, 46% of units sold were by marketplace sellers. Amazon takes about a 15% commission on goods sold by marketplace sellers.

Amazon reported $252 million in profit in the quarter, up from $79 million in Q3 2015.

In North America, Amazon generated net sales of $18.87 billion, up 25.7% from $15.01 billion in the same period a year ago. Sales in North America accounted for 57.6% of revenue. International net sales grew at a faster pace, up 28.3% in the quarter.

Amazon this summer said customers worldwide placed 60% more orders on Prime Day this year than they did last year. Prime Day was July 12, during the Q3 reporting period. Orders from U.S. shoppers were up more than 50% year over year, and the number of orders placed on Amazon’s mobile app more than doubled compared with Prime Day 2015, the company said.

For the quarter ended Sept. 30, Amazon reported:

• North American net sales of $18.87 billion, up 25.7% from $15.01 billion in the same period a year ago.
• International net sales of $10.61 billion, up 28.3% from $8.27 billion.
• What Amazon calls “net service sales,” which includes the commission Amazon takes from sellers on its marketplaces, revenue from its fast-growing Amazon Web Services cloud computing unit and other items, increased 50.4% year over year to $10.38 billion from $6.90 billion.
• AWS revenue increased 54.9% to $3.231 billion from $2.086 billion.
• Total net sales of $32.71 billion, up 29.0% from $25.36 billion in the same period a year ago.
• Net income of $252 million, a 219% increase from $79 million a year earlier.
• North America sales of books, music and other media of $3.24 billion, an increase of 9.5% over $2.96 billion in Q3 2015. North America sales of electronics and general merchandise increased 29.5% to $15.34 billion from $11.84 billion.
• Internationally, media product sales grew 7.3% to $2.49 billion from $2.32 billion, while electronics and other product sales grew 36.6% to $8.06 billion from $5.90 billion.
• Unit sales grew 28%, faster than the 26% they grew in the same quarter a year ago.
• The percentage of unit sales by marketplace sellers on Amazon sites increased to 50% of units sold. The percentage of unit sales by marketplace sellers has steadily grown quarter on quarter. It was 46% in Q3 2015 and added a percentage point each quarter since.
• Worldwide shipping costs increased 43% to $3.90 billion from $2.72 billion. Worldwide shipping revenue, including fees paid for Amazon Prime memberships ($99 a year in the United States) and from marketplace sellers that use Amazon's Fulfillment by Amazon service, increased 44% to $2.15 billion from $1.49 billion. Net shipping costs increased 43%.
• Amazon had 306,800 full- and part-time employees, an increase of 38% from 222,400 a year ago.

Amazon added 18 fulfillment centers in the third quarter, and 26 for the year, said Brian Olsavsky, Amazon chief financial officer, on a call with analysts. This was driven in part by adoption of FBA by marketplace merchants. "FBA is a key pillar of Prime. It makes Prime stronger," he said. "Prime success attracts more sellers."

For the fourth quarter, Amazon projects net sales of between $42.0 billion and $45.5 billion, representing growth of between 17% and 27% over the fourth quarter of 2015.

During the quarter Amazon added to the list of Prime features by adding access to Audible Channels content from Audible Inc., a company Amazon owns. Audible sells audio books and other original audio content. With Audible Channels, Prime members get free access to some of it. Earlier this month it added Prime Reading, which gives Prime members, through Amazon’s Kindle app, free access to select books, graphic novels and popular, current-issue magazines, such as Elle, Better Homes & Gardens and Smithsonian. Prime is Amazon’s fast-shipping-and-more program consumers in the United States pay $99 annually to be in. Amazon does not say how many Prime members it has, but an estimate released this week from securities research firm Consumer Intelligence Research Partners LLC puts membership in the United States at 65 million as of Sept. 30.

The e-retailer during the quarter also began offering the Alexa Echo and Alexa Dot voice-controlled assistant devices for sale in the United Kingdom and Germany. It is the first time Amazon has sold the devices outside the United States.

For the nine months ended Sept. 30, Amazon reported:

• North American net sales of $53.54 billion, up 26.8% from $42.21 billion in the same period a year ago.

• International net sales of $30.02 billion, up 27.3% from $23.58 billion.
• Net service sales of $28.21 billion up 51.6% from $18.61 billion.
• Total net sales of $92.25 billion, up 29.5% from $71.26 billion in the same period a year ago.
• Net income of $1.622 billion, up from $114 million a year earlier. 

Amazon is the No. 1 retailer in the Internet Retailer Top 500 Guide.