Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
Amazon is quickly becoming the go-to place to shop for everyday essentials.
The tech giant said on Thursday that it has seen a rise in sales of essential items in the health, beauty, personal care, and nonperishable grocery categories, thanks to its speedy delivery.
“While these items often have a lower average selling price, the strength in everyday essential’s revenue is a positive indicator that customers are turning to us for more of their daily needs,” Amazon SVP and CFO Brian Olsavsky said on the company’s earnings call.
“We see that when customers purchase these types of items from us, they build bigger baskets, shop more frequently, and spend more on Amazon,” he added.
Olsavsky’s remarks came shortly after the company posted strong third-quarter results. Amazon’s overall revenue increased 11% YoY to $158.9 billion led by double-digit growth across AWS and its advertising business.
Household essentials was also the top category purchased during Amazon’s fall Prime Day in October, according to Numerator data.
On the same earnings call, CEO Andy Jassy also hinted that this consumer behavior and trade downs mean that Amazon will have to rely on even faster delivery times.
“We take that as a real positive, seeing the growth in everyday essential categories, which are really predicated on speed,” Jassy said on the call.
To fulfill the promise of faster delivery, Jassy said, Amazon will be “significantly changing” the way it gets items into its fulfillment network and spreads inventory to its regional fulfillment nodes.
“While still relatively early in this rearchitecture, we’ve already improved our ability to spread inventory across our fulfillment centers by 25% year over year,” he said. “As we scale and optimize this new design, we expect these changes will further improve inventory placement, offer faster delivery times, save transportation costs, and enable us to increase units shipped per box.”
Amazon made same-day delivery orders to roughly 40 million customers in the past quarter, an increase of 25% YoY. Jassy said the faster Amazon is able to promise customers that it can deliver their items, “the more frequently they buy and the more they actually use Amazon for their shopping needs.”