Full-year sales grew 12% to $574.8 billion in 2023, up from $514.0 billion in 2022.

Amazon ranks No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. Digital Commerce 360 has published the latest analysis of the industry as a whole within the 2023 Global Online Marketplaces Report.

How much did Amazon make in Q4 sales?

North American sales made up the bulk of revenue in the fourth quarter, growing 13% year over year to $105.5 billion. International sales, however, grew at a faster clip. The segment increased 17% year over year to account for $40.2 billion in sales. Sales from Amazon Web Services (AWS) grew 13% to $24.2 billion.

Operating income also grew in the quarter. It reached $13.2 billion in the fourth quarter, nearly five times the $2.7 billion in operating income Amazon recorded in the year-ago period. Net income totaled $30.4 billion, up from a net loss of $2.7 billion in Q4 2022.

Amazon records a successful holiday season

“This Q4 was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon,” CEO Andy Jassy said in a statement. The online retailer said customers purchased more items on Amazon during the 2023 holiday season than in any previous season, culminating in a record-breaking Black Friday and Cyber Monday. 

Amazon customers ordered more than 1 billion items during the holidays, with 500 million of those orders coming from third-party sellers, it said.

During the same period, millions of new consumers signed up for an Amazon Prime Membership. Amazon has 176 million Prime members as of December 2023, according to research from Consumer Intelligence Research Partners (CIRP). That’s the highest level ever recorded by CIRP, which has monitored Prime membership since 2013. Membership is up about 5% from 168 million in December 2022, per CIRP. Those estimates are for Amazon customers with Prime membership, not households.

Amazon fulfillment improvements 

Ahead of the earnings release, Amazon announced results of fulfillment advancements in 2023 and plans to continue growing the area in 2024.

“The regionalization of our U.S. fulfillment network led to our fastest-ever delivery speeds for Prime members while also lowering our cost to serve,” Jassy said in a statement.

The ecommerce giant delivered 7 billion units by same-day or next-day delivery to Prime members in 2023. More than 4 billion of those deliveries took place in the U.S., and more than 2 billion were in Europe.

The number of items delivered on the same day or overnight grew 65% year over year in the U.S. in 2023, Amazon said. More than 70% of Prime orders in the U.K. arrived the same day or next day in the fourth quarter of 2023. Amazon celebrated its billionth same-day delivery in the U.S. in December.

“We’ve challenged every closely held belief for our fulfillment network and reevaluated every part of it, and found several areas where we believe we can lower costs while also delivering faster for customers. Our inbound fulfillment architecture and resulting inventory placement are areas of focus in 2024, and we have optimism there’s more upside for us,” Jassy told investors on Feb. 1.

Amazon will add incremental fulfillment capacity going forward, based on demand for same-day delivery sites and automation, said Brian Olsavsky, chief financial officer.

Amazon on generative AI

The company discussed its advances in generative artificial intelligence (AI) across the company in its earnings presentation, too. 

It announced the beta test of Rufus, a new generative AI shopping assistant trained on Amazon’s product catalog. So far, the assistant is available to a small subset of U.S. customers to answer shopping questions and make recommendations, Amazon said. It will roll out to all U.S. customers in a few weeks.

The retailer also introduced a generative AI tool that will allow brands to produce lifestyle imagery for advertisements, it said. 

Amazon also added generative AI capacity to Amazon Connect, the AWS cloud contact center, it said. Generative AI will give customer service agents suggestions on how to help customers and generate summaries of conversations, it said.

“2023 also was a very significant year of delivery and customer trial for generative AI or Gen AI in AWS,” Jassy said. “Customers are also excited about our approach to generative AI. Still relatively early days, but the revenues are accelerating rapidly across all three layers, and our approach to democratizing AI is resonating well with our customers. We have seen significant interest from our customers wanting to run generative AI applications and build large language models and foundation models, all with the privacy, reliability and security they have grown accustomed to with AWS.”

How did Amazon do financially in 2023?

For the fiscal fourth quarter ended Dec. 31, Amazon.com Inc. reported:

• Sales increased 14% to $170.0 billion, from $149.2 billion in the year-ago period.
• Amazon Q4 North America sales grew 13% to $105.5 billion.
• International sales grew 17% year over year to $40.2 billion.
• AWS sales reached $24.2 billion, growing 13%.

For the 12 months ended Dec. 31, Amazon reported:

• Amazon sales grew 12% to $574.8 billion, from $514.0 billion in 2022.
• Operating income reached $36.9 billion, increasing from $12.2 billion in 2022.
• AWS sales grew 13% to $90.8 billion.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Amazon earnings article.

How big is Amazon’s total ecommerce business?

Amazon.com is the largest ecommerce retail company in the world with $412.1 billion in annual web sales (excluding all marketplaces and B2B companies such as Alibaba). Amazon’s business model is multifaceted, as it is one of the world’s largest marketplaces (No. 3) with over $650 billion in total GMV and over $400 billion in third-party sales. Its AWS unit climbed over $90 billion in sales in 2023, and its advertising sector brought in another $46.9 billion the same year.\

During 2020, Amazon grew its ecommerce business by over $54 billion. That’s nearly 10 times the size of Nordstrom’s annual ecommerce revenue.

Amazon’s first-party sales (online store)

If we split out Amazon’s online store sales, removing subscription services and its third-party seller fees, Amazon would still be the largest ecommerce player in the world by over $100 billion, as China’s JD.com (second largest, excludes Alibaba) sells over $125 billion annually. Those who follow Amazon.com closely can easily see the growing sectors of the ecommerce giant’s business. Its online store is not among them anymore. In fact, Amazon’s first-party sales are the slowest growing business arm with a 3-year CAGR of only 5.5%. Meanwhile, its third-party seller fees have a 16.4% 3-year CAGR, Amazon’s advertising services have a 22.7% CAGR, and its subscription services have a 12.5% 3-year CAGR.

How big is Amazon Prime Membership revenue?

Amazon makes over $40 billion annually just from its subscription services. To put that into perspective, if Amazon sold nothing else — without a single first-party product on its site, and all it sold was subscription services — Amazon.com would rank as the third-largest online retailer in North America. That would still make it larger than Apple (No. 3 with $35 billion in 2022 web sales) and Home Depot (No. 4 with $22.4 billion in 2022 web sales). Moreover, even comparing it to the combined total revenues from Nike (No. 9), Costco (No. 6) and Chewy (No. 13), Amazon’s subscription services alone would still be greater.

How large is Amazon’s advertising business?

Amazon’s annual advertising revenue sits at $46.9 billion. This is equivalent to more than half of Walmart’s entire ecommerce operation and more than twice the size of Target’s online revenue. 

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U.S. ecommerce sales in Q3 2023 accounted for 21.4% — or more than a fifth — of total retail sales.

Meanwhile, total retail sales in Q3 reached $1.267 trillion, according to Digital Commerce 360 analysis. That’s a 3.2% increase from Q2 2023.

US ecommerce sales growth outpaces total growth

Year over year, U.S. ecommerce grew an estimated 7.7% in the first nine months. Total retail sales increased 3.9% over the same period.

“Ecommerce has been more important for retail growth this year than any year since 2020,” said James Risley, research data manager and senior analyst at Digital Commerce 360. “While in-store retail bounced back after pandemic restrictions lifted, shoppers are still turning to ecommerce more as it provides convenience and utility beyond avoiding disease.”

And U.S. ecommerce sales growth outpaced total growth in Q3 2023. U.S. ecommerce represented 41.0% of total retail growth for the first nine months of 2023. For the third quarter, online sales in the U.S. accounted for nearly half (49.7%) of total retail growth.

Still, U.S. ecommerce growth remained mostly flat in Q3 compared with the previous three quarters.

“Growth is still slower than pre-pandemic times, showing that while ecommerce growth is faster than overall growth, during the rough economic times we’re in, ecommerce is struggling along with the rest of retail,” Risley said. 

Compared with Q2, offline (in-store) retail sales declined in Q3. Offline sales cracked $1 trillion in Q2, but they didn’t in Q3, reaching about $995.5 billion, according to Digital Commerce 360 analysis. Risley said Walmart Inc.’s return to competing with Amazon Prime Day this year might have helped boost some of the online spending in Q3.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by their web sales. Walmart is No. 2 in the Top 1000.

How do we calculate ecommerce penetration?

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

Percentage changes may not align exactly with dollar figures due to rounding.

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The Top 1000 is Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. The latest analysis of the industry as a whole is published within the 2023 Global Online Marketplaces Report.

How much did Amazon make in Q3 sales?

Amazon sales in Q3 grew 13% over $127.1 billion in 2022. In North America, Amazon sales increased 11% year over year to $87.9 billion. And internationally, Amazon sales grew 16% year over year to $32.1 billion. Sales from AWS, or Amazon Web Services, increased 12% year over year to $23.1 billion.

“We saw our highest quarterly worldwide operating income ever,” said chief financial officer Brian Nowak on an Oct. 26 call with investors. It increased $8.7 billion year over year.

Amazon operating income grew at a much larger percentage than total sales compared with Q3 2022 — 343%. That’s nearly quadruple Amazon’s operating income in the year-ago period, growing to $11.2 billion in the third quarter from $2.5 billion. AWS operating income was $7 billion, up from $5.4 billion in Q3 2022.

Fulfillment and supply chain investments pay off

“Our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilize, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” CEO Andy Jassy said in a statement. “The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history. The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI.”

In addition to taking a regional approach to its fulfillment network, Amazon has begun offering Supply Chain by Amazon, which Jassy referred to as “a fully automated set of supply chain services.”

Supply Chain by Amazon can:

• Pick up inventory from manufacturing facilities around the world
• Ship it across borders
• Handle customs clearance and ground transportation
• Store inventory in bulk
• Manage replenishment across Amazon and other sales channels
• Deliver directly to customers

And Amazon sellers can do all of that without “having to worry about managing their supply chain,” Jassy said.

Brendan Witcher, vice president and principal analyst at research firm Forrester, said Amazon is one of the best in the business at delivering. Because of that, he said, it will have the challenge of setting customer expectations to always deliver on time. Witcher said it was notable that Amazon is using AI to help with inventory planning and optimizing driver routes.

“The real litmus test for Amazon’s regional supply chain will be the ability to deliver one-day and same-day delivery this holiday season with this level of growth,” Witcher said. “Fortunately, some of the volume should spread out a bit given that holiday really began with Amazon’s customers with the October Deal Days sale.”

Amazon powers up its generative AI technology

Jassy echoed points about generative AI from Amazon’s Q2 call with analysts in August. He broke down Amazon’s generative AI into three layers.

1. Lowest layer: Compute to train large language models (LLMs).
2. Middle layer: LLMs as a service.
3. Top layer: Applications that run the LLMs.

The middle layer, Jassy said, allows customers to customize those models “using their own data but without leaking that data back into the generalized LLM.”

“In these early days of generative AI, companies are still learning which models they want to use, which models they use for what purposes and which model sizes they should use to get the latency and cost characteristics they desire,” Jassy said in the Oct. 26 call with analysts. He said Amazon Bedrock “is the easiest way to build and scale enterprise-ready generative AI applications.”

“It’s pretty exciting what they’re doing for third-party sellers on the capabilities of generating web pages, generating product imagery for third-party sellers,” Forrester’s Witcher said. “They really do understand the small-business seller, to be quite blunt.”

Amazon earnings

For the fiscal third quarter ended Sept. 30, Amazon.com Inc. reported:

• $143.1 billion in Amazon Q3 sales. That’s up 13% from $127.1 billion in the year-ago quarter.
• Amazon sales in North America in Q3 grew 11% year over year to $87.9 billion.
• International sales increased 16% year over year to $32.1 billion.
• AWS sales in Q3 grew 12% year over year to $23.1 billion.

For the nine months ended Sept. 30, Amazon reported:

• $404.8 billion in Amazon sales. That’s up from $364.8 billion in the year-ago period.
• Year-to-date Amazon operating income reached $381.2 billion. That’s up from $355.7 billion in the comparable period last year.
• International sales grew to about $91 billion, up from $83.5 billion.
• AWS sales grew to nearly $66.6 billion from $58.7 billion in the comparable period in 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Amazon earnings article.

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The Walmart sales event will begin at 7 p.m. on Monday, October 9 with deals on electronics, home, apparel, toys and other products, the retailer says.

Both retailers are major players in the U.S. ecommerce landscape.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Walmart ranks No. 2. Amazon also ranks No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9 in that database.

What to expect this year from Walmart during Amazon’s Big Deal Days

Walmart is promoting the sale as a time to start shopping for holiday purchases. Customers should expect “hyper-personalized content and a curated shopping experience” the retailer said in a press release. Unlike Walmart+ Week in July, this sale is not limited to Walmart+ members, and anyone can shop the deals.

Walmart highlighted some deals that will be included in the sale, including the Apple Watch SE, Mega Barbie The Movie Dreamhouse and various Keurig models. Consumers can also consult the deals coming soon page on Walmart.com.

Holiday Kickoff purchases can be ordered with curbside pickup, same-day delivery, two-day shipping or late-night express delivery, Walmart says.

Walmart has a history of competing with Prime Day

Walmart previously held sales events that overlapped with major Amazon Prime sales. In July, the first Walmart+ Week coincided with Amazon Prime Day in July. Both retailers held online sales across different categories of merchandise. Walmart sat out the event in July 2022, however.

2022 was the first year Amazon held a second Prime sales event in October, called the “Early Access Sale.” Walmart didn’t hold a full competing event last fall. The retailer highlighted “flash deals” on its website at the time, and promoted Halloween sales, Digital Commerce 360 previously reported.

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President and CEO Andy Jassy told investors on Amazon’s Q2 earnings call that the ecommerce giant has been improving its artificial intelligence and machine learning technology. It has also been making its fulfillment network more efficient. Jassy also said Amazon Business, its B2B division, is one of its fastest growing offerings.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. The latest analysis of the industry as whole is published within the 2023 Global Online Marketplaces Report.

For more detailed coverage, read our Amazon Q2 earnings story.

1. Amazon has been refining its AI

Jassy last week said AI “is going to be at the heart of what we do.” Moreover, he said every business division within Amazon has multiple ongoing generative AI initiatives.

Among those initiatives, Amazon has built CodeWhisperer, an AI-powered coding companion that recommends code snippets directly in the code editor. This is meant to accelerate developer productivity in the coding process.

But Amazon’s work in the AI sphere is still in an early phase, he said.

“Generative AI has captured people’s imagination, but most people are talking about the application layer, specifically what OpenAI has done with ChatGPT,” Jassy said. “It’s important to remember that we’re in the very early days of the adoption and success of generative AI, and that consumer applications is only one layer of the opportunity.”

2. Faster fulfillment in Amazon’s Q2 and beyond

In its fiscal Q2, Amazon reduced the miles its drivers traveled to deliver packages to customers by 19%, Jassy said. It did so through “regionalization,” or its logistics overhaul that shifts its fulfillment network from a national one to a network divided into eight regions that can each operate on their own.

This has led to a 20% reduction in number of touches for each delivered package, Jassy said.

“When shipments come from fulfillment centers that are closer to customers, they travel shorter distances, which cost less in transportation, gets there faster and is better for the environment,” Jassy said.

He said Amazon’s development and expansion of same-day fulfillment facilities has driven this increase in efficiency. He added that the same-day facilities are Amazon’s fastest fulfillment mechanism and one of its least expensive.

The same-day facilities are located in the largest metro areas around the country, Jassy said. Amazon intends to double the number of these facilities, he said.

“While we’re seeing strong early results from this regionalization effort, we still see several ways in which we can be more efficient in this structure and we believe will improve productivity further,” Jassy said. “We’ve also re-evaluated virtually every part of our fulfillment network this past year and see additional structural changes we can make that provide future upside.”

3. Big business, small business

Jassy emphasized Amazon Business’ $35 billion annual run rate for gross sales. It serves more than 6 million customers.

Still, he said, Amazon has only a fraction of the features it needs “to address more of the enterprise at this point.” For example, there are features to make bigger procurement workloads easier for companies.

Merchants that use Amazon’s “Buy with Prime” feature, on average, increased their shopper conversion 25%. That “makes a real difference to their business,” Jassy said.

He added that those who “participate in Prime Day activities, in aggregate, experienced a 10x increase in daily Buy with Prime orders during the sales event period versus the month before we announced Prime Day.”

Although Jassy and other Amazon representatives did not mention its small business sellers on the Q2 earnings call, Amazon did mention them in its earnings release.

It said more than 60% of Amazon sales in its marketplace came from independent sellers, most of them small and medium-sized businesses.

U.S.-based independent sellers sold more than 4.1 billion products and averaged more than $230,000 in sales, Amazon said. It also announced a filter on its marketplace to search for small businesses.

Check back for more earnings reports.

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Crocs Inc. (No. 104)

Crocs reported revenue grew 12% year over year to a record $1.1 billion in its fiscal second quarter ended June 30.

“Both the Crocs and Hey Dude brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26% in the second quarter,” CEO Andrew Rees said in a written statement.

Crocs acquired Hey Dude Shoes in January 2022 for $2.5 billion. Hey Dude brand DTC sales grew 29.7% in the second quarter, and digital sales grew 36.7% in that time period. Total Hey Dude revenue was $239.4 million in the quarter, up 2.9%. 

Crocs were a top seller in Amazon’s Prime Day sales event, according to data from Web traffic measurement firm Similarweb Ltd. However, the retailer is facing “quite a lot of pressure” from gray market sellers on Amazon, Rees said in an earnings call.

Keurig Dr Pepper Inc. (No. 110)

Keurig Dr. Pepper reported net sales grew 6.6% in the second quarter ended June 30 to $3.7 billion. Sales growth was led by Keurig’s Liquid Refreshment Beverage category, which includes carbonated soft drinks, seltzers, and energy drinks. Dr. Pepper and Squirt were among the most popular brands, the beverage company said. Meanwhile, sales of single serving K-Cup pods were down 2.3% in the quarter.

Keurig did not share specifics about digital sales in the quarter. Digital Commerce 360 estimates online sales made up about 6% of total sales in 2022, reaching $859.5 million.

Harley-Davidson (No. 430)

Harley-Davidson’s consolidated revenue declined 2% in the second quarter ended June 30 to $1.4 billion, the retailer reported. The decline was driven by a 4% drop in revenue from Harley-Davidson Motor Company (HDMC), which sells motorcycles and related products. Part of the decline was offset by 19% revenue growth at Harley-Davidson Financial Services (HDFS), which provides financing and insurance to dealers and customers. 

The motorcycle retailer did not share specifics of online sales. However, Harley-Davidson is expanding its online marketplace of pre-owned motorcycles.

Mattel (No. 200)

Mattel net sales declined 12% in Q2 ended June 30 to $1.1 billion, the toy company reported. The retailer attributed the decrease to declines in the toy industry as a whole, with the expectation that consumers are waiting to make purchases for the holiday season, CEO Ynon Kreiz told investors. 

Following the release of the Barbie movie, Mattel entered 165 product partnerships in thousands of stores, Kreiz said. So far, toys and products related to the film have sold out across distribution channels, Kriez says. Mattel did not share specific figures on digital sales. Mattel president and chief operating officer Richard Dickson was recently appointed as chief executive officer to Gap Inc. (No. 20), effective Aug. 22.

Overstock.com Inc. (No. 50)

Online home furnishings retailer Overstock said revenue was down 20% year over year to $422 million for the quarter ended June 30, 2023.

The online furniture retailer completed its acquisition of competitor Bed Bath & Beyond in June for $21.5 million. Read more coverage of Overstock’s quarterly earnings here.

Tractor Supply Co. (No. 97)

Tractor Supply net sales grew 7.2% year over year in the second quarter $4.18 billion. Comparable store sales grew 2.5% over the period, which ended July 1.

The retailer announced plans to reach 3,000 U.S. locations from the current 2,164 by opening 90 new stores per year. About 30% of current stores, 700, are now organized in the Project Fusion layout, CEO Hal Lawton told investors. The retailer is adding drive-thru pickup lanes to these stores for omnichannel orders. 

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The consumer protection agency filed a lawsuit in Washington state federal court claiming that Amazon’s website manipulates users into enrolling in Prime. Subscribers pay $139 a year for the service, which provides privileges like speedy free delivery, video streaming and access to 100 million songs. The cancellation process for Amazon Prime is also difficult to find and requires multiple steps, the FTC alleged. The FTC said Amazon referred to the process internally as the Iliad, after Homer’s lengthy epic poem.

The agency has recently targeted subscription cancellations, proposing a rule in March that would require companies to make it as easy to cancel as it is to sign up.

The FTC filed the lawsuit on the same day Amazon announced its annual Prime Day sale and Walmart announced its Walmart+ Week sale.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Walmart ranks No. 2.

Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9 in that database.

FTC suit against Amazon

In its complaint, the FTC said consumers must click through five pages on the desktop web store or six on the mobile app to cancel Prime. The FTC also claimed Amazon failed to turn over information investigators sought, taking more than 18-months to produce materials.

The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers. The agency previously used the law to ding MoviePass and its former parent company, Helios and Matheson Analytics Inc., Intuit Inc.’s Credit Karma and Ericsson’s internet phone service Vonage over subscription auto-renewal and cancellation practices. Vonage paid $100 million to settle the FTC’s suit and Credit Karma $3 million to reimburse consumers.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement.

Amazon didn’t immediately respond to a request for comment.

Competing membership programs

Prime membership has been a key differentiator for Amazon, helping it convert occasional shoppers into loyal devotees who make the company their default choice when shopping online. Walmart Inc., Amazon’s biggest competitor, launched the Walmart+ subscription in 2020 for $98 a year, offering many of the same benefits.

About 167 million Amazon shoppers had Prime memberships as of March. That’s unchanged from a year earlier, according to market research firm Consumer Intelligence Research Partners. More than 90% of consumers who try a free 30-day Prime membership become paying members, according to the Chicago research firm.

Analysts say Prime membership has stagnated in the country since Amazon boosted the annual price from $119, a sign that a subscription is less attractive to consumers struggling with a stubbornly high inflation rate.

In the U.S., Prime members spend about twice as much on Amazon as non-Prime members. Amazon’s revenue from subscription services, which is mostly from Prime memberships, was $9.66 billion in the quarter ended March 31. That’s about 7.6% of its overall revenue for the period.

Amazon changed its process for cancelling Prime subscriptions last summer after pressure from the European Commission and national consumer watchdogs. The company introduced a simplified two-click process.

The suit is the third the FTC has filed against Amazon in the past month. The company agreed to pay $30.8 million to settle allegations that it failed to delete data about kids collected by its Alexa speakers and that its Ring doorbells and cameras illegally spied on users. Amazon said it disagreed with the FTC’s allegations but agreed to settlements to resolve the cases.

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Amazon’s total sales include its own product sales, sales from its marketplace, as well as marketplace seller fees, advertising fees and revenue from Amazon Web Services (AWS).

Amazon reported net income of $3.2 billon in the first quarter, a dramatic swing from the $3.8 billion loss a year earlier. Ecommerce sales dropped 0.06% year over year to $51.093 billion in Q1.

Amazon revenue breakdown

Amazon’s results suggest the company’s efforts to reduce costs are starting to bear fruit. Operating expenses increased 8.7% in the quarter, the slowest pace in at least a decade. The company’s North America segment was profitable on an operating basis for the first time since late 2021.

Amazon Web Services generated $21.4 billion in sales, a 16% rise from a year earlier and higher than the $21.2 billion analysts had expected. The cloud-computing division is the company’s largest source of income. Despite AWS’  better-than-expected Q1 performance, Amazon said it began laying off employees in the AWS operation amid slowing sales growth in its most profitable division.

That 16% rise from Q1 2022 is the slowest growth rate reported since Amazon began breaking out the segment and the fifth consecutive quarter in which growth slowed year-over-year.

Earlier this year, chief financial officer Brian Olsavsky warned that AWS growth would slow in 2023.

Advertising sales rose more than 21% to $9.51 billion in the quarter. Revenue from third-party seller services — which include commissions, shipping services and other fees that Amazon collects from sellers on its marketplace — jumped 17.7% to $29.8 billion in Q1.

“Amazon did what it needed to do in Q1 by reversing — or at least stalling — its most troublesome declining growth trends,” said Andrew Lipsman, an analyst at Insider Intelligence, told Bloomberg News. “Amazon’s stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner.”

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Amazon announces BNPL option

Several hours before releasing its earnings, Amazon announced a new buy-now-pay-later option called Citi Flex Pay on Amazon Pay. Under the program, eligible Citi credit card members can pay over time with Citi Flex Pay when using Amazon Pay during checkout at participating online retail sites. The deal with Amazon marks the first time Citi credit card members can use Citi Flex Pay through a digital wallet.

Amazon already offers BNPL through Affirm. Amazon also accepts Apple Pay, and in March Apple announced a BNPL plan of its own.

Operational changes at Amazon

Amazon has made several moves in recent months to cut its operating costs, most notably by laying off thousands of workers from its ecommerce unit. In early January, CEO Andy Jassy said planned job reductions totaled 18,000 workers. That’s a full 1% of Amazon’s workforce — and well above earlier expectations that Amazon would slash 10,000 jobs.

The Seattle-based company employed almost 1.47 million people as of March 31, a decrease of 10% from the period a year earlier and down from more than 1.54 million workers three months earlier.

Second-quarter guidance on Amazon revenue

Seattle-based Amazon said it expects sales in the current quarter to reach between $127 billion and $133 billion, keeping in line with analysts’ forecasts.

Other news from the first quarter

On April 26, news site The Verge reported Amazon had decided to close its Halo division, which sold fitness- and sleep-tracking devices. Amazon had stopped selling its three Halo products and plans to lay off portions of the Halo team, the news site said.

“We have made the difficult decision to wind down the Halo program, which will result in role reductions,” Melissa Cha, Amazon’s VP of smart home and health, told staffers in an email The Verge obtained.

Some analysts said Amazon has more work to do. “We keep waiting for profit and cash flow to turn here,” Stefan Slowinski, an analyst at BNP Paribas Exane, told Bloomberg. “With all of the headlines on restructuring and closure of businesses, we’re really not getting that coming through in the numbers.”

Amazon earnings

For the fiscal first quarter ended March 31, Amazon reported:

• Amazon revenue from third-party seller services of $29.8 billion. That’s 17.7% increase from the comparable quarter of 2022.
• $9.5 billion in revenue from advertising services, a 21% jump from a year earlier
• Operating cash flow of $54.3 billion for the trailing twelve months, an increase of 38% from the $39.3 billion for the trailing twelve months ended March 31, 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

Bloomberg News contributed to this report.

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Amazon’s total sales include its own product sales, sales from its marketplace, as well as marketplace seller fees, advertising fees and revenue from Amazon Web Services (AWS).

Amazon revenue breakdown

AWS generated $21.38 billion in sales. The cloud-computing division is the company’s largest source of income. That’s a 20% increase from a year earlier. But that 20% increase is the slowest growth rate reported since Amazon began breaking out the segment.

In a call with journalists, chief financial officer Brian Olsavsky warned that AWS growth would slow in 2023.

“We realize everyone’s trying to cut their budgets — we are in our main Amazon business, in our infrastructure as well,” Olsavsky said. “We do expect to see some slower growth rates for the next few quarters.”

“The expected deceleration in AWS was even worse than expected and means Amazon can’t rely on that business units’ operating profits as much in coming quarters,” Andrew Lipsman, an analyst at Insider Intelligence, told Bloomberg News.

Amazon’s net income decreased to $278 million, compared with $14.3 billion in the fourth quarter of 2021. Amazon attributed the swing to a pre-tax valuation loss of $2.3 billion from its investment in Rivian Automotive, Inc., which makes electric vehicles.

For the year ending Dec. 31, Amazon reported a net loss of $2.7 billion. That marks the worst annual loss since the retailer went public in 1997.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Operational changes at Amazon

Amazon has made several moves in recent weeks to cut its operating costs, most notably by laying off thousands of workers from its ecommerce unit. In early January, CEO Andy Jassy said planned job reductions totaled 18,000 workers — a full 1% of Amazon’s workforce — and well above earlier expectations that Amazon would slash 10,000 jobs.

Additionally, Amazon is seeking to sublease millions of square feet of underused warehouse space. 

In a statement announcing Q4 earnings, Jassy said he was “encouraged by the continued progress we’re making in reducing our cost.” He noted that the company remained “quite optimistic about the long-term opportunities for Amazon.”

The drop in ecommerce sales in Q4 marked the fourth such decline in the most recent five quarters.

Revenue from third-party seller services — which include commissions, shipping services and other fees that Amazon collects from sellers on its marketplace — jumped 20% to $36.36 billion. in Q4.

First-quarter guidance on Amazon revenue

Seattle-based Amazon said it expects sales in the current quarter to reach between $121 billion to $126 billion, keeping in line with analysts’ estimates.

Other news from the fourth quarter

Amazon now allows Buy with Prime merchants to display customer reviews from Amazon.com within their own online stores. The retailer also announced an integration with BigCommerce, an ecommerce platform, that will help merchants easily enable Buy with Prime on their storefronts with no coding required.

Amazon launched RxPass, a new Prime membership benefit from Amazon Pharmacy that offers unlimited eligible prescription medications for $5 per month, including free shipping.

For the fourth quarter, Amazon reported

• An operating income loss of $412 million from North American operations.
• A 47.8% drop in global operating income to $2.53 billion from $4.85 billion a year earlier.
• $2.87 billion in net income, a 9.37% decline from the $3.16 billion a year earlier.

For the year ending Dec. 31, 2022, Amazon reported

• A net loss of $2.7 billion, compared with net income of $33.4 billion in 2021.
• Operating income of $12.2 billion, less than half the $24.9 billion of 2021. The North America segment operating loss was $2.8 billion, compared with operating income of $7.3 billion in 2021.
• Operating cash flow of $46.75 billion, a 1% rise compared with $46.33 billion in 2021.

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this report.

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It was that kind of year. Neither earth-shattering nor dismal. Neither ground-breaking nor a return to the norm.

We got the first indications of this in January. The COVID-19 pandemic wasn’t over, but the retail industry was pretty eager to act as if it was. The National Retail Federation planned a return to the real world for its Big Show. But just days before attendees were due to arrive, coronavirus cases spiked in New York and the keynote speaker — Honest Co. founder, actor and celebrity Jessica Alba canceled. Still, the show must go on, as actors say. The Big Show did come to New York. But not many attendees did.

There was another indication back in January that 2022 would be less than remarkable. The big business story in retail that month was that Kim Kardashian’s underwear label Skims had doubled its valuation to $3.2 billion in nine months. That suggested innovation in 2022 would involve attaching a celebrity’s name to a version of an actual innovation from two decades earlier.

By February, there was a throw-the-spaghetti-against-the-wall-and-see-what-sticks air about the entire retail world. Target Corp. offered Starbucks beverages as part of its curbside pickup. Peloton, Home Depot, Wish.com and Shipt all decided to try new CEOs, and Amazon laborers — who hadn’t had much luck working with the giants of organized labor — decided to organize themselves.

Then, on Feb. 24, Russia invaded Ukraine.

In the following weeks, the retail world behaved admirably. Toy companies became symbols of the resistance, while major companies around the globe cut ties to the Russian economy. In the meantime, there were other ominous signs for ecommerce. A global supply chain crisis was poised to worsen. And inflation for the year ending March 2022 hit 8.5% — the largest 12-month increase since 1981.

By April, the bad news had everyone in ecommerce worried that things were falling apart. Everyone seemed to be losing money and/or going deeper into debt. Buy-now-pay-later options grew popular with shoppers and retailers. Amazon.com Inc., No. 1 in Digital Commerce 360’s Top 1000, posted a $3.8 billion loss. Bed Bath & Beyond said its net sales fell 22%. Young adults borrowed money and engaged in crypto speculation, and Etsy sellers went on strike.

April showers are supposed to give way to May flowers. But in 2022 … not so much. The bad news continued. Surplus inventory levels soared. Ecommerce growth continued to slow. Wayfair Inc., No. 7 in Digital Commerce 360’s Top 1000, announced a hiring freeze. EBay’s sales fell and Target’s earnings plummeted. In the meantime, the spaghetti-against-the wall craze continued as Amazon started subleasing warehouse space while opening a clothing store, just as Walmart announced plans for delivery by drone.

In June, things grew darker. Bed Bath & Beyond’s CEO stepped down as sales fell further. So too did the CEO of The RealReal, No. 40 in the ranking of Digital Commerce 360 Top 100 Online Marketplaces. Meanwhile, Apple and PayPal both made it easier for shoppers to go deeper in debt.

July was supposed to be a time of great excitement in ecommerce, as Amazon held its Prime Day sale. But shoppers were underwhelmed. As if in response to the disappointment, Amazon announced a drop in ecommerce sales (albeit for the quarter before Prime Day), Shopify slashed its workforce, and soaring inflation pushed consumers to amass BNPL debt to pay for groceries.

In August, things grew both darker and brighter. Best Buy, No. 6 in the 2022 Digital Commerce 360 Top 1000, said U.S. online sales dropped 14.7%, while Macy’s said its Q2 online sales fell 5% and multiple retailers struggled to unload excess inventory. By contrast, Walmart said its online sales rose 12% in the second quarter, albeit largely because of inflation. Overall ecommerce numbers grew, but at a pace that was well below what the industry had grown accustomed to. U.S. ecommerce spending in Q2 marked its fourth straight quarter of single-digit growth following the 45%-50% jumps during the first year of the pandemic, according to a Digital Commerce 360 analysis of U.S. Department of Commerce figures.

The industry responded once more by throwing pasta against the wall. Peloton said it would sell on the Amazon marketplace, and Walmart added streaming video to its membership program.

In September, things turned macabre. Bed Bath & Beyond’s chief financial officer died by suicide. Shortly before that, the world learned that Chewy founder and activist investor Ryan Cohen — who had driven Bed Bath & Beyond shares higher during the meme stock craze — had sold his entire stake in the retailer. Shares fell 40% in the wake of Cohen’s action. Unsurprisingly, Bed Bath & Beyond soon announced it had another dismal quarter.

By now, the pattern was clear. Times are tough; pasta must be thrown. So Amazon announced it would have another Prime Day sale. Meanwhile, Kanye West severed ties with the Gap, suggesting that in 2022 true innovation might mean removing a celebrity’s name from someone else’s innovation.

In October, the ecommerce world watched as that second Prime Day — dubbed the Amazon Prime Early Access sale, in a sign that in 2022 true innovation might mean changing the name of an earlier innovation — fizzled.

Meanwhile, in a particularly disturbing development, online prices for food hit a new record high. Then, in a move that no one thinks would help those prices fall, The Kroger Co. said it had agreed to buy rival Albertsons Cos. Inc. for $24.6 billion.

As October ended, Digital Commerce 360 warned that “online retailers again will have a tough go of it this season, trying to convince shoppers who are contending with inflation and recession fears not to skimp on their gift lists.”

November, of course, is when the hopes and fears of all of ecommerce converge in the Cyber 5 period. Early in the month, there were some pieces of bad news that suggested Cyber 5 results might prove disappointing. Alibaba Group Holding Ltd. decided not to disclose full sales results for its signature Singles’ Day shopping festival for the first time, after forecasts that the figure may suffer a decline unprecedented in the event’s 14-year history. Alibaba owns and operates Taobao and Tmall, which hold the No. 1 and No. 2 spots in the ranking for Digital Commerce 360 Online Marketplaces. And Singles’ Day is the world’s largest shopping festival.

Meanwhile, Amazon said it planned to cut about 10,000 jobs — the largest ever headcount reduction at the ecommerce giant as it braces for slower growth and a possible recession.

Yet December — like 2022 itself — saw the release of news that was both good and bad. Cyber 5 results, the effects of inflation, struggles over supply chain and inventory levels, all proved to be neither earth-shattering nor dismal. Neither ground-breaking nor a return to the norm.

Early in December, the industry learned that web sales grew 4% to reach $35.27 billion in the Cyber 5, or the five-day period of Thanksgiving through Cyber Monday, according to Adobe Analytics. Amazon and Walmart were the big winners. That news came just days after the U.S. Commerce Department said the value of overall retail purchases dropped 0.6% in November — the largest decline in 11 months.

Also in December came the piece of news that most perfectly summed up the entirety of 2022 in retail. Celebrity Justin Bieber blasted H&M for what he called the “trash” of the all-new Justin Bieber-themed merchandise sold by H&M, suggesting that the biggest innovation of 2022 involved attaching a celebrity’s name to innovations they don’t like.

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