ICYMI: Amazon's surging demand will position its Prime subscription, online grocery, and international businesses for long-term success
Amazon's online grocery sales tripled on an annual basis in Q2, positioning it as a major player in the burgeoning market.
It increased its grocery delivery capacity by over 160% and tripled its number of grocery pickup locations in an effort to meet surging interest in services during the pandemic. Its booming sales suggest its efforts have been successful, and it can try to use this performance to add loyal online grocery customers to compete for online sales with grocery stalwarts like Walmart and online grocery-focused businesses like Instacart.
The e-tailer's international business skyrocketed and turned a profit, as it may be gaining more traction abroad. Amazon's international segment posted an operating income of $345 million thanks to its net sales growing 41% YoY, excluding F/X, in the quarter after posting an operating loss for the last several years. This could mean Amazon is attracting new customers in other markets and driving more spend from existing customers during the pandemic, setting it up to win more sales internationally even after the crisis subsides.
The e-tailer has already spent over $4 billion to adjust for the pandemic, and it'll need to spend even more to meet demand in Q3 and Q4. Q2 is typically Amazon's weakest quarter for retail volume, which gave it room to expand its operations and handle the increase in demand this past quarter, Olsavsky said.
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