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I have more good news for you. Amazon shares jumped up by 10% after the company reported astonishingly good holiday trading season results last night. These numbers really underscored the benefits of Amazon's massive investment in its distribution network, and in the value proposition of the Amazon Prime offering.
That 10% surge in share price added $100 billion to the company's valuation. If you are one of the 345 Vestact customers who own Amazon shares, some of the gain is yours. Congratulations!
Amazon Prime members can now enjoy free two-hour grocery delivery from Amazon Fresh and Whole Foods Market in more than 2,000 US cities and towns. That has taken massive investment in distribution centres, and lots of hiring (they now have 800,000 employees), but really pays off when people do last minute Christmas shopping.
Amazon CEO Jeff Bezos was in a triumphant mood last night, noting that "more people joined Prime this quarter than ever before. We now have over 150 million paid Prime members around the world. We've made Prime delivery faster. The number of items delivered to US customers with Prime's free one-day and same-day delivery more than quadrupled this quarter compared to last year".
Prime subscribers also get lots of online content, including original movies, TV shows and sports content on Prime Video.
Amazon Web Services (AWS) racked up sales of $10 billion, up 34 per cent. AWS kicked in $2.6 billion of the group profits of $3.9 billion. Did I mention already that the Vestact website is hosted on AWS? Of course I did!
Amazon's fledgling advertising business grew by 40 per cent, achieving sales of $4.8 billion. That's mostly money paid by third-party suppliers to make their products more visible on Amazon's platforms.
The outlook for 2020 is good. It really seems as if the bulk of spending on distribution infrastructure in the US is behind them, promising a sustained margin improvement in that business. Now, it's on to the rest of the world. Amazon is a core investment holding. Everyone with an investment account should own them.