Amazon's Grocery Delivery Helps it Beat Q4 Expectations

Lisa Johnston
Editor-in-Chief, CGT
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Amazon Q4 2019 Highlights

  • Fiat Chrysler Automobiles, Lamborghini and Rivian are all adding Alexa to select infotainment vehicle systems. 
  • New participants to Amazon's Voice Interoperability Initiative include Audi, Volkswagen, Acer, BBC, Hisense, TIM, TiVo, Vestel, Aspinity, Syntiant and Vesper.
  • Free returns can now be made at over U.S. 18,000 drop-off locations, and over 5,800 locations offer label-free and box-free returns.
  • Amazon Business and Business Prime launched in Canada.
  • Amazon Fashion produced its first holiday catalog, and it and Amazon Home partnered with Refinery29 to open a holiday pop-up shop in New York City.
  • Independent third-party sellers sold over 1 billion items during the holiday season, including over 100 million items shipped with Prime Free One-Day Delivery.

Amazon blew past earnings expectations in the fourth quarter, spurred by a record number of Prime subscriber additions and growing success of its grocery delivery service.

The company revealed that it now counts 150 million global subscribers in its Prime loyalty program, and CEO Jeff Bezos said more people joined the service in Q4 than any other quarter before.

It’s also beefing up its Amazon Fresh one- and two-hour grocery delivery business, which was added as a Prime benefit last fall.

“We’ve made Prime delivery faster,” noted Bezos. “The number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year.”

Amazon Fresh is performing well, according to CFO Brian Olsavsky. Grocery delivery orders from the combination of Fresh and Whole Foods Market more than doubled in the fourth quarter vs. the prior-year period, he said in an earnings call.

“We believe customers are starting to notice and take advantage of this. … Right now, we're really just testing and reacting to the customer demand and the customers' preferences, and we'll do so for the foreseeable future,” he said.

The company last revealed its Prime subscriber count in April 2018, in which it counted 100 million members.

Amazon’s net sales grew 21% in Q4, reaching $87.4 billion. Operating income rose to $3.9 billion, up from $3.8 billion in the prior-year period, and net income increased to $3.3 billion, up from $3 billion.

Its AWS subsidiary, meanwhile, is welcoming five new artificial intelligence services:

  • Amazon Kendra: Uses natural language processing and machine learning to unite enterprise data silos to provide high-quality results to common queries instead of a random list of links in response to keyword queries.
  • Amazon CodeGuru: Helps software developers automate code reviews and ID an application’s most expensive lines of code.
  • Amazon Fraud Detector: Helps businesses identify online identity and payment fraud in real time.
  • Amazon Augmented Artificial Intelligence (A2I): Validates machine learning predictions through human confirmation for developers.
  • Amazon Transcribe Medical: Provides real-time speech-to-text transcription for healthcare providers.

Amazon Connect is also coming to AWS to help businesses improve their customer service via machine learning. The company said it can help ID customer issues and trends, search call and chat transcripts, and improve agent performance.

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