Amazon.com Inc. beat expectations with earnings for its fiscal fourth quarter ended Dec. 31, 2023. Its net sales in the quarter grew 14% year over year to $170.0 billion. That surpassed expectations of 8% to 13% growth.

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 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. 

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.

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