Amazon physical stores show big Q2 growth

Amazon reported a stunning 10% increase in physical store sales for the second quarter as the retail giant also logged its third consecutive $100 billion quarter.

Amazon’s revenue grew by 27% year over year to $113.08 billion. That’s a slowdown from the first quarter when sales skyrocketed 44% year over year. It's also a slowdown from the second quarter of 2020 when sales rose 41%.

But Amazon’s physical stores, which include its four grocery banners of Whole Foods Market, Amazon Fresh, Amazon Go Grocery and Amazon Go, increased revenue by 10% to $4.2 billion from $3.77 billion a year ago. During the previous quarter, Amazon's physical store sales declined 16%.

Amazon's operating cash flow increased 16% to $59.3 billion for the second quarter ended June 30. Free cash flow decreased to $12.1 billion.

Excluding the $2.5 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 24% compared with second quarter 2020. Operating income increased to $7.7 billion in the second quarter, compared with $5.8 billion in second quarter 2020. Net income increased to $7.8 billion in the second quarter, or $15.12 per diluted share, compared with $5.2 billion, or $10.30 per diluted share, in second quarter 2020.

“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic. At the same time, AWS has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud,” said Andy Jassy, Amazon CEO. “Thank you to all of our passionate, innovative, mission-driven employees around the world for continuing to stay focused on delivering for customers — I am very excited to work with you as we invent and build for the future.”

For the first time, Amazon brought Just Walk Out technology to a full-sized grocery store in May, offering customers in Bellevue, Wash., the option to skip the checkout line or use traditional checkout. Amazon Fresh now has 15 stores in the United States and five in the United Kingdom.

Amazon's Prime is now available in 22 countries with the addition of Prime in Portugal, which offers members unlimited, free two-day delivery on millions of products, as well as access to Amazon Prime Video streaming.

Business Prime now serves more than 1 million business customers of all sizes worldwide, including Chevron, Citi, and the State of Utah. Since launching in 2017, Business Prime has saved members millions of dollars by shipping over 140 million packages free of charge. 

On April 27, Amazon announced that it is expanding Key by Amazon In-Garage Grocery Delivery to everywhere grocery delivery from Amazon is available, providing the service to more than 5,000 U.S. cities and towns. Originally launched in five cities last November, Key In-Garage Grocery Delivery proved to be very popular with Amazon customers, according to the company. It can now be used by millions more eligible Prime members wishing to have their Amazon Fresh and Whole Foods Market groceries delivered inside their garage to keep packages safe from weather, damage and sticky-fingered neighbors.

“Customers who tried Key In-Garage Grocery Delivery have loved the service, which is why we’re expanding it to everywhere Amazon offers grocery delivery,” said Pete Gerstberger, head of Key by Amazon. “As customers look for more convenience in their daily lives, we’re excited to deliver another service that not only helps them save time, but provides peace of mind knowing that tonight’s dinner is safe in their garage and out of the weather.”

The garage grocery delivery expansion comes just one week after Amazon made another announcement in its quest to reinvent the grocery space and how consumers shop. The company is now allowing grocery shoppers at Whole Foods Market to pay for groceries without cash, credit cards or even a smartphone app.

Amazon announced April 21 that it is launching its Amazon One technology at Whole Foods Market in Seattle, with plans to expand the tech cross the chain in the coming months. Amazon One allows shoppers to pay using the palm of their hand: their unique palm signature, as Amazon calls it.

Amazon first introduced the technology in September as an entry and payment option at several non-Whole Foods stores in the Seattle area, including Amazon Go, Amazon Go Grocery, Amazon Books, Amazon 4-star and Amazon Pop Up.

Amazon says thousands of customers have signed up for the service, and feedback has been great — customers have shared they appreciate how quick it is to enroll and use, and that its contactless nature has been helpful in the current environment.

"Over the past several years, we’ve focused on innovating on behalf of our customers to make their shopping trips easier and more effortless," said Dilip Kumar, VP, physical retail and technology at Amazon. "We started with Just Walk Out technology in Amazon Go, and we have since brought that experience to new store formats and locations, and made it available as a service to third-party retailers to use in their stores. We built the Amazon Dash Cart, a smart shopping cart that helps customers in our Amazon Fresh grocery stores skip the checkout line and roll out when they’re done. Most recently, we introduced Amazon One, a fast, convenient, contactless way for people to use their palm to enter, identify and pay."

Amazon now has 15 Amazon Fresh physical grocery stores. Amazon opened its first international physical retail stores powered by Just Walk Out technology with the launch of three Amazon Fresh locations in London. These new convenience grocery stores sell a range of products, including the new “by Amazon” private brand, and enable shoppers to enter a store, grab what they want, and leave without stopping to check out. Amazon Fresh grocery stores expanded into four new communities in the United States: Oak Lawn, Ill.; Bloomingdale, Ill.; Fullerton, Calif.; and Long Beach, Calif.

Finally, Amazon continues to expand its air cargo network to meet growing customer demand. In January, the company announced the purchase of 11 aircraft from Delta and WestJet to expand its Amazon Air fleet to more than 85 aircraft by the end of 2022. The company also announced new Amazon Air sites in Toledo, Ohio, and Fairbanks, Alaska, and plans to expand existing operations in Canada this summer.