Amazon is spending for the future

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Amazon is spending for the future

10/25/2019

Seattle-based Amazon is on track to generate more than $300 billion in revenue next year, which could make it the second-largest U.S. company by revenue after Walmart. Amazon’s quarterly revenue during the third quarter ended Sept. 30 grew 24% to $70 billion, the second time in its history that it has hit the $70 billion mark. 

Amazon says its obsession with customer service and massive investment in free one-day shipping is leading to more sales and more loyalty.

Amazon spent more than $800 million in each of the last two quarters to expand its free one-day delivery program and said it is expecting to spend $1.5 billion more on the initiative during the fourth quarter to expand its warehouse footprint and product assortment.

Meanwhile, Amazon’s grocery aspirations have expanded not just to include faster online delivery but also to focus on bricks-and mortar.

Since Amazon acquired Whole Foods Market in 2017, the grocer’s footprint has increased by nearly 40 stores. Earlier this month, The Wall Street Journal reported that Amazon aims to open a chain of physical grocery stores (not to include its Whole Foods and Amazon Go banners). The new physical grocery stores could number in the thousands, the Journal reported.

Amazon today operates 16 Amazon Go cashierless grocery stores, with more of those in the pipeline.

During the third quarter Amazon rolled out its Prime Now online grocery delivery and pickup program to more Whole Foods stores and now has it available in 88 cities for delivery and in 30 cities for pickup. Amazon also expanded AmazonFresh to Indianapolis, Houston, Minneapolis and Phoenix, with options for ultrafast one- and two-hour delivery.

Looking to the holiday quarter, Amazon said it expects to generate at least $80 billion for the first time ever during the fourth quarter. That guidance is actually below the Street’s average estimate of $87.4 billion, which caused Amazon’s stock to slump late last week.

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