Amazon delivered a stunning 1.5 billion items this holiday season, including toys, home products, beauty and personal care products and electronics, with third-party sales on its marketplace rising by more than 50 percent year-over-year worldwide.
Overall, the company’s Q4 sales are expected to be in the range of $112 billion to $121 billion, which would be a significant increase from the record-breaking $92.6 billion in sales that the company observed in the previous quarter. The company is set to release its Q4 earnings report next month, which will provide a more holistic view of its business.
While Amazon is enjoying growth in sales, it is also seeing its operational costs skyrocket. According to Jeff Wilke, CEO of Amazon Worldwide Consumer, the company has incurred more than $10 billion in pandemic-related operating costs, which includes increasing floor space for fulfillment and logistics by 50 percent. The company also spent more than $2.5 billion on pay incentives and bonuses and hired 400,000 workers as it sought to expand its workforce to keep up with the surge in demand.
“We are doing this because we want to provide stability and support for you during what will likely remain a challenging winter as vaccine distribution gets underway,” Wilke said.
The company is also investing in building out its logistics network, which includes expanding on its fleet of planes, trucks and warehouses — an effort that seems to have paid off with no disruption to its delivery service during the holiday season, according to GeekWire.
As the eCommerce giant has sought to expand on its delivery service and improve access to faster delivery options to its Prime members, its shipping costs have also increased. In Q3, the company spent $15 billion on shipping costs alone, a 57 percent increase. In total, the company is expected to spend $50 billion at least in shipping related costs this year.