Amazon saw sales surge by 40% between April and June as consumers around the world went online for more everyday goods during pandemic lockdown restrictions, generating dramatic growth in B2C parcel volumes.
The US e-commerce giant reported net sales of $88.9 billion in the second quarter of 2020, with a 43% rise to $55.4 billion in North America and a 38% increase to $22.7 billion in the rest of the world.
Operating profits nearly doubled to over $5.8 billion compared with operating income of $3.1 billion in second quarter of 2019 despite high pandemic-related spending. Net profits doubled to $5.2 billion year-on-year.
The company increased operating profits in North America by 37% to $2.1 billion while international business made its first profit for several quarters with EBIT of $345 million compared to a $601 million loss in the second quarter of last year.
However, growth is also driving up delivery costs rapidly, the Q2 results showed. Amazon’s shipping costs surged by 68% to more than $13.6 billion last quarter. This was even more than in the ‘peak’ final quarter of 2019 when the company spent $12.9 billion to get goods delivered to customers.
Meanwhile, Amazon’s efforts to speed up to next-day deliveries in the USA and other markets have been held up by the COVID-19 pandemic. According to US media, CFO Brian Olavsky told analysts on a Q2 results call that the company is running out of fulfilment and delivery capacity to handle the continued surge in volumes.
Commenting on the Q2 results, founder and CEO Jeff Bezos declared: “This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe.
“As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.
“We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales,” he added.
