“We are erring on the side of having too much capacity”: Amazon reports massive Q3

E-commerce giant tallied $6.3B in net income; spent $4.7B on property and equipment

Jeff Bezos (Getty, iStock)
Jeff Bezos (Getty, iStock)

How much capacity is too much?

For Amazon, the limit doesn’t exist. At least not yet.

The e-commerce giant — which has been adding warehouses at a dizzying clip across the nation — is on track to expand its fulfillment and transportation capacity by 50 percent, it said. The company has already spent $4.7 billion on property and equipment.

The Jeff Bezos-led behemoth reported another massive quarter on Thursday. Third quarter net income grew to $6.3 billion, tripling the $2.1 billion year-over-year. That bested the $5.2 billion second quarter net income, which itself broke a record.

Net sales similarly increased 37 percent to $96.1 billion in the third quarter, compared with $70 billion in Q3 2019 and $88.9 billion in the second quarter.

Sign Up for the undefined Newsletter

The company’s growth in fulfillment centers and delivery was originally planned for 2021, but was moved forward to satisfy demand prompted by Covid-19, the company said. Beyond the pandemic, the warehouse, logistics and last-mile center space is necessary to meet goals of one-day shipping. In the third quarter, the company opened 100 new “operations buildings” across North America, hired 100,000 permanent employees and is hiring another 100,000 seasonal employees.

“The logistics team is really good on, in one way, locking up long-term commitments on space and buildings,” CFO Brian Olsavsky said during Thursday’s earnings call. He added the team was also adept at being able to adjust the timeline in or out to match capacity and demand. We are erring on the side of having too much capacity.”

Amazon has signed a flurry of leases in the past month in New York alone. It inked three leases for delivery stations in Westchester County, along with the Bronx and Brooklyn. Earlier this month, it signed a giant lease for a 975,000-square-foot warehouse in Staten Island this week.

In India, Amazon is expanding its operations with 10 new fulfillment centers, five new sortation centers, and nearly 200 delivery stations.

In addition to acquiring more fulfillment centers, Amazon is building new wind and solar farms to produce a clean energy equivalent of the electricity used by all of its Echo devices. Its first wind farm is in Bäckhammar, Sweden.

Read more

Amazon CEO Jeff Bezos with (clockwise from top left: 1055 Bronx River Ave. in Bronx, NY; 3507 W. 51st St. in Chicago; 13200 Southwest 272nd St. in South Miami-Dade, Florida; 28820 Chase Place in Valencia, California (1055 Bronx River Ave via Google Maps; 3507 W. 51st St. via 42 Floors; 13200 Southwest 272nd St. via Google Maps; 28820 Chase Place via IAC Commerce Center)
New York
“Headwind to profitability”: Amazon doubles down on fulfillment centers
Amazon CEO Jeff Bezos with (top to bottom) 5 Warehouse Lane in Elmsford in Westchester County, 2300 Linden Boulevard in Brooklyn and 1502 Bassett Avenue in the Bronx (Getty; Google Maps)
New York
Amazon inks three warehouse deals for delivery stations
Amazon CEO Jeff Bezos and the Matrix Global Logistics Park in Staten Island (Google Maps; Getty)
New York
Amazon inks huge deal for 975K sf warehouse
Recommended For You