Amazon came out with several announcements yesterday as it appeared to be trying to create a receptive and optimistic context for the Q2 earnings report it is scheduled to release on Thursday.
• Bloomberg reports that Amazon plans to “double the number of US same-day delivery facilities in the ‘coming years,'” a move evidently designed to help it maintain its existing dominance in the $1.4 trillion e-commerce sector.
In a statement, Amazon pointed out that when it first launched Prime in 2005 and offered free two-day shipping, there were one million items included in the offer. “Today, Prime is much more expansive and much faster. With more than 300 million items available with free Prime shipping and tens of millions of the most popular items available with free Same-Day or One-Day Delivery, we hit our fastest Prime speeds ever last quarter. Across the top 60 largest U.S. metro areas, more than half of Prime member orders arrived the same or next day. So far this year, we’ve delivered more than 1.8 billion units to U.S. Prime members the same or next day—nearly four times what we delivered at those speeds by this point in 2019.”
How is this being done? Amazon explains it this way:
“In short, we divided the country into smaller, easier-to-reach regions. Previously, we fulfilled orders from any of our operational sites across the country. Now we have eight interconnected regions serving smaller geographic areas. We keep a broad selection of inventory in each region, making it faster and less expensive to get those products to customers. Today, more than 76% of the orders we fulfill come from within the customer’s region. Items shipped from nearby fulfillment centers or delivery stations helps packages get to customers not only faster, but also with fewer emissions.
Placing products closer to customers.
“We use increasingly advanced machine learning algorithms to better predict which items customers in various parts of the country will want and when they will want them, and we work with our vendors and selling partners to store those products closer to customers. This helps to ensure that we have the right inventory, in the right places, at the right time. We’re also expanding our capacity to place products in the right fulfillment center in each region. This allows us to shorten replenishment times while maintaining the broadest selection of products available to fulfill a customer’s entire order at one time from the Amazon location closest to them.”
Regionalizing the network, Amazon said, “reduces miles traveled and handoffs. Since the beginning of this year alone, the distance between our sites and the customer decreased by 15%, with 12% fewer touchpoints within our middle mile network.”
Doug Herrington, CEO of Worldwide Amazon Stores, posted the following video laying out Amazon’s shipping moves:
• Amazon also announced that its Amazon Clinic virtual health care business would roll out nationally.
“Last November, we introduced Amazon Clinic, a virtual health care marketplace that makes it easy for customers to quickly get the care they need for more than 30 common health concerns like urinary tract infections, pink eye, and erectile dysfunction,” said Dr. Nworah Ayogu, Chief Medical Officer and General Manager for Amazon Clinic, in a prepared statement. Now, Amazon Clinic is “available to customers in all 50 states and Washington, D.C., offering more people easy access to licensed clinicians for virtual care. In addition to message-based consultations in 34 states, Amazon Clinic now supports video visits nationwide. Amazon Clinic offers customers 24/7 access to clinicians directly through Amazon.com and the Amazon mobile app.”
The statement notes that “Amazon Clinic removes barriers by helping customers treat their everyday health concerns wherever they are, at any time of day. And, they can see the cost before they start the visit.”
CNBC points out that “Amazon does not provide the telemedicine services itself, but instead provides Amazon Clinic as a platform to connect telemedicine partners with patients. Current partners include Curai Health, Hello Alpha, SteadyMD and Wheel … Amazon Clinic doesn’t yet accept insurance, but consumers can use insurance to help pay for medications prescribed through the service. Prescriptions can be filled at any pharmacy, including Amazon’s own online pharmacy, which handles fulfillment and delivery.”
CNBC also provides some historical context:
“Amazon has tried for years to crack the health-care industry with mixed success. The company launched its own online pharmacy in 2020, born out of its acquisition of PillPack in 2018. Amazon introduced, then shuttered, a telehealth service called Amazon Care, and closed its $3.9 billion acquisition of health-care provider OneMedical earlier this year. It also teamed up with Berkshire Hathaway and JPMorgan to launch an incubator to improve employer health programs in 2018, then shut it down three years later.”
Here’s a video posted to explain the service:
• Business Insider reports that Amazon announced that it has “created a new AI group that reports to CEO Andy Jassy. That team is led by Rohit Prasad, SVP and head scientist for Alexa.
“As part of this move, Prasad joins a group of top executives who report directly to Jassy. Other members include retail boss Doug Herrington, cloud CEO Adam Selipsky, and chief financial officer Brian Olsavsky.
“It’s a group with a lot of new faces. In his 2 years since becoming CEO, Jassy has added or replaced at least 8 executives in his top leadership team. Business Insider published a list of his direct reports in July 2021, and you can compare that to the fresh group listed below. (Jassy’s direct reports are different from the S-team, a group of more than two dozen most senior decision-makers at Amazon).
“The changes reflect a rapidly evolving business environment. Generative AI has taken the industry by storm in the past year and Prasad’s rise is part of this new tech boom. There’s also been internal turmoil through massive layoffs and the departure of some of Amazon’s most tenured and powerful executives.”
KC’s View:
The argument here for some time has been that Amazon seemed to have entered a Today-Is-Day-Two phase, which isn’t necessarily bad, though it is at odds with the company’s essential value proposition.
Jassy’s tenure at Amazon has been marked by cost cutting and a find-change-in-between-the-sofa-cushions mindset, so I think it makes sense for the company – and Jassy in particular – to be associated with growth and ambition.
I don’t know what the numbers will show on Thursday, but Jeff Bezos always used to downplay quarterly reports, saying that he was always more focused on several quarters ahead. He’d also say that investors looking for short-term results probably should invest elsewhere, though as Amazon has matured some of that thinking may have gone by the wayside.
While Thursday may be interesting, it is important to look 52 and 104 Thursdays ahead. Because that’s where the future is.
The post Amazon Sets The Table For Thursday’s Q2 Earnings Report appeared first on MNB.
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