Amazon’s physical retail business by the numbers

In Amazon’s latest earnings call, CEO Andy Jassy said “folks are sleeping a bit” on the progress the company has made in expanding its physical retail business.

So let’s break it down.

In Q3, the company reported $5.7 billion in net sales for physical stores. That’s up 2% YoY, which is the same rate as online stores. Unit sales also grew 15% year to date, and in absolute dollars terms, the company added $90 billion in gross sales in 12 months.

• At Walmart US, for comparison, physical stores raked in roughly $96 billion in Q2.
• At the same time, Walmart pushed farther into Amazon’s territory with global e-commerce sales rising 23% for the quarter.

But for a better sense of Amazon’s progress, let’s look at its own past sales numbers:

When the company first reported physical store sales in Q3 of 2017, following its acquisition of Whole Foods, that number came in at ~$1.3 billion. Therefore, Amazon has more than quadrupled its physical store sales in the last nine years. But the total is only part of the story. What Jassy highlighted last week during the earnings call were the operating margins.

“I’m not aware of another retail business approaching Amazon’s revenue size, hundreds of billions of dollars, with double-digit operating margins inclusive of ads that’s growing at this pace,” he said.

He added that over the past few years, Amazon’s North America and international segments both expanded their operating margins by nearly 10 percentage points, and the company is using those profits to reinvest in the customer experience.

Earlier this year, Amazon announced plans to shutter brick and mortar chains Amazon Go and Amazon Fresh, as it converted a number of these locations into Whole Foods Markets. The company is also reportedly experimenting with a big-box format in the Chicago suburbs, though the business model for this store type remains unclear.