It would be a shame if some bigger news overshadowed Amazon’s fourth-quarter earnings. What could possibly be bigger than the company’s first $100 billion quarter with net sales checking in at $125.6 billion? How could a 44 percent bounce over 2019’s Q4 take a back seat to anything?
Turns out the answer to these questions appeared in an innocent paragraph at the bottom of the first page of the company’s earnings release: “Amazon is also announcing today that Jeff Bezos will transition to the role of Executive Chair in the third quarter of 2021 and Andy Jassy will become Chief Executive Officer at that time.”
“Amazon is what it is because of invention,” Bezos said in a more expanded statement on his tenure. “We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”
Hard to argue any of those points. The fourth-quarter earnings certainly represented, in hindsight, the apex of Bezos’ achievements at Amazon. Not only did its core eCommerce business set records, including this year the Prime Day shopping event that usually finds itself in Q1 or Q2, but Amazon Web Services grew from $9.95 billion in revenue last year to $12.7 billion this year.
“Jeff will be the executive chair on the board,” Chief Financial Officer Brian T. Olsavsky told analysts on the earnings call. “He will be involved in many large ‘one-way door’ issues … meaning … the more important decisions things like acquisitions, things like strategies and going into grocery and other things. Jeff’s always been involved with those decisions and that’s what he will focus his time on.”
Speaking of grocery, Olsavsky addressed the company’s activity as it adds to its Whole Foods footprint. Amazon Go and Amazon Fresh have been the biggest initiatives in that area, as well as using “ghost” stores to fill online grocery orders. Olsavsky called out new technology in those stores on the call.
“We have some pretty cool self-checkout capabilities and we’re implementing some of the ‘just walk out’ technology, which are some interesting areas that are resonating with customers. I think they appreciate that. Not just in terms of maybe not wanting to have physical contact with everyone in the store but just even beyond that, the general convenience of being able to move throughout the store and check out more efficiently than you otherwise would in a traditional retail environment. We’re excited to do more on that front.”
The quarter also worked well for the company’s third-party sellers. Worldwide sales for that category grew over 50 percent compared to 2019. Sellers surpassed $4.8 billion in worldwide sales from Black Friday through Cyber Monday, growing about 60 percent from the previous year. During the holiday season as a whole, small and medium-sized businesses in the U.S. sold nearly one billion products in Amazon’s store.
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