Amazon in Prime Position Following Strong Q2

The company's sales leaped 39 percent year-over-year.

On the heels of its latest Prime Day — which gave Amazon.com its single biggest day for Prime membership enrollment in its history — the Seattle-based tech giant went on to trounce expectations in its second quarter. On Thursday, the company announced that sales jumped 39 percent compared to the year-ago quarter, and earnings per share came in at $5.07, more than double analysts’ expectations of $2.49.

Sales of $52.9 billion didn’t quite reach analysts’ expectations of $53.35 billion, but investors remained impressed. The numbers show massive improvement from last year’s report of EPS of 40 cents on sales of $37.96 billion.

The company’s stock dipped almost 3 percent ahead of the earnings announcement, but buoyed by the results, bounced back almost 4 percent in after-hours trading.

Amazon’s retail and cloud services energize its massive business. Amazon Web Services raked in $1.6 billion in operating income on $6.1 billion in revenue. AWS grew 49 percent year-over-year, and it is on track to easily surpass $10 billion in revenues this year. In the second quarter alone, it pulled in more than $6 billion in revenue.

As for its retail operation, that sector brought in almost $47 billion in revenue between April and June, with operating profit of a little more than $1.3 billion. Net income also easily surpassed expectations coming in at $240 million.

Those results don’t include the cash pouring in from Prime Day. While the company doesn’t disclose sales figures from the shopping event, it did describe the 36-hour event as its “biggest global shopping event” ever — despite the widespread glitches that hampered access early on.

The marketplace lost an estimated $1.2 million per minute during the outages, totaling $90 million in all, according to One Click Retail’s estimates. Even so, the promotional period still surpassed Cyber Monday, Black Friday and its previous record-breaking Prime Day. Amazon also noted that small- and medium-sized merchants made more than $1 billion during the sale.

Apparel, in particular, has been an area of intense focus for Amazon. Most recently, the company launched its Prime Wardrobe home try-on service and Echo Look fashion camera, and continues to pursue strategic partnerships with fashion brands and its own private-label initiatives.

As for where it goes next, Amazon Fashion has plenty of room to grow. Sales last year of $15 billion in gross merchandise volume could continue to expand dramatically in the years ahead, according to UBS, which believes its GMV in apparel could balloon up to $40 billion in 2022. That would give Amazon 32 percent of the total North America market.

The company’s voice tech remains another area of intense interest, especially for a retail industry intrigued about the prospect of shopping by voice.

“While voice-activated retail is still nascent, it’s a rapidly growing part of the consumer experience,” said Amit Sharma, founder and chief executive officer of Narvar, a retail tech firm that helps stores from DSW to Dollar Shave Club with customer loyalty and postpurchase experience. “As Amazon grooms Alexa to understand complex commands and participate in even more aspects of the customer journey, consumers will transition from using voice as mostly a search function to using virtual assistants for deeper engagement and new experiences with brands.”

So far, Alexa and its Echo family of products still dominate the smart speaker market. As if to thwart skepticism about voice shopping and consumers’ willingness to buy things sight unseen, Amazon launched a smart speaker with a display, the Echo Show, last year.

On Thursday, another contender became official: Lenovo took the wraps off its own display-packing speaker — the very first screened device to come from the Google Home partnerships announced in January.

The appliance, powered by Google and built by Lenovo under Google’s guidelines, could give the Echo Show a run for its money. This newcomer is beautiful, well-made and capable of more functions. But even more intriguing is that the voice gadget is connected to Google Express shopping, as opposed to Alexa’s ties to the Amazon marketplace.

So now, with two giants going to head to head over voice-enabled displays, it’s increasingly looking like speak-to-shop is taking another step forward.

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