Despite headlines about poor profitability from Amazon, the underlying sales numbers continued to grow aggressively. Third quarter sales growth was up 29% with product sales and service sales up 21% and 50% respectively. The total net is slightly down to last quarter but the 2nd best quarter of growth over the past several years.
North America specific sales was slightly down to last quarter's growth rate with 26% whilst International total sales grew 28%, the second highest growth rate in several years.
Most noteworthy is third party sellers now account for roughly half of all unit sales on Amazon. This is incredibly important as third party sales are extremely profitable for Amazon, further fuel the product selection and require no inventory investment from Amazon. Take note that 32% of total net sales for Amazon are now driven in services.
This past quarter reminds of several years ago when Amazon reinvested all profits into further fueling the buildout of distribution centers and international expansion. As the stock has appreciated in the profitable quarters of the past two years, Amazon has ratcheted up the investments once again. That investment has led to a miss in profits in the short term with the hope for significant improvements over the longer term. Will those investment eventually payoff? I wouldn't bet against Amazon when you focus on the underlying sales strength of this past quarter.
Previous quarter recap can be found here.