Amazon is raising the price of its Prime membership for the first time in four years, the company announced during its fourth quarter earnings report, which showed increases in both revenue and profits.
The company said the price of its annual membership will rise by $20 to $139, while monthly memberships will rise by $2 per month to $14.99. For new Prime members, the price change will go into effect on Feb. 18 and for current Prime members, the new price will apply after March 25 on the date of their next renewal. The company says Prime members in the U.S. received more than 6 billion free deliveries in 2021, and over 200 million Prime members worldwide streamed shows and movies.
For the fourth quarter ended Dec. 31, Amazon said net sales increased 9% to $137.4 billion, compared with $125.6 billion in fourth quarter 2020. Excluding the $1.3 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 10% compared with fourth quarter 2020. Net income increased to $14.3 billion in the fourth quarter, or $27.75 per diluted share, compared with $7.2 billion, or $14.09 per diluted share, in fourth quarter 2020.
The company reported that its physical store sales (including food retail banners Whole Foods Market, Amazon Fresh, Amazon Go) were up 16% during the quarter. It was the third straight quarter of double-digit growth for the company's physical stores. Amazon currently has 511 Whole Foods stores, 23 Amazon Fresh stores and 24 Amazon Go stores.
For the full year, net sales increased 22% to $469.8 billion, compared with $386.1 billion in 2020. Net income increased $33.4 billion, or $64.81 per diluted share, compared with net income of $21.3 billion, or $41.83 per diluted share, in 2020.
Amazon says net sales are expected to be between $112 billion and $117 billion in the first quarter of 2022, or to grow between 3% and 8% compared with first quarter 2021.
“A big thank you to employees across Amazon who overcame another quarter of COVID-related challenges and delivered for customers this holiday season. Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years. It’s been a tremendous effort, and I’m appreciative and proud of how hard our teams have worked to serve customers,” said Andy Jassy, Amazon CEO. “As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron. Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic. When you combine how we’re staffing and scaling our fulfillment network to bring even faster delivery to more customers, the extraordinary growth of AWS with 40% year-over-year growth (and now a $71 billion revenue run rate) ... and a plethora of new capabilities that we’re building in areas like Alexa, Ring, Grocery, Pharmacy, Amazon Care, Kuiper, and Zoox, there’s a lot to look forward to in the months and years ahead.”
Amazon’s fourth quarter earnings followed a lackluster third quarter report that saw its profits cut in half as the company dealt with labor shortages and supply chain disruptions, which apparently did not dent the company this time.
Amazon says it had its biggest-ever Black Friday to Cyber Monday holiday shopping weekend last year, with apparel, beauty, home, and toys among the top-selling categories.
The first Starbucks Pickup with Amazon Go store opened in New York City during the fourth quarter. With this new store concept, customers can order a Starbucks beverage or food item for pickup through the Starbucks app and grab food items from the Amazon Go market, all in one convenient location without having to wait in line to pay. Starbucks and Amazon Go plan to open two more stores in 2022, with the next location planned for The New York Times Building in New York City.
UK grocer Sainsbury’s opened SmartShop Pick & Go, an Amazon Just Walk Out technology-enabled convenience store in Holborn Circus, London, during the fourth quarter. The store marked the first time Amazon’s Just Walk Out technology launched in a third-party customer store internationally. It was also the first time Amazon retrofitted a third-party retail store with Just Walk Out technology, meaning the store uses Sainsbury’s existing fixtures and fittings with Amazon’s technology.
For the second year in a row, the Retailer Preference Index — a report from research firm dunnhumby based on insights from 10,000 shoppers on 57 grocers in the U.S. — ranked Amazon as the best overall grocery retailer. Amazon was recognized for offering customers consistently low prices, convenience, and great selection on a wide variety of grocery items sold on Amazon.com.
Last month Amazon said it would expand its physical grocery store portfolio to include a new c-store format aimed at serving customers in suburban-area locations.
The new store format is an extension of the company's Amazon Go banner. The first suburban Amazon Go will open in the coming months at 13209 39th Ave. SE in Mill Creek, Wash. Amazon says it also plans to bring this new store format to the Los Angeles metro area in the coming months.
The total square footage of the Mill Creek store is approximately 6,150 square feet. Front of house is approximately 3,240 square feet. Amazon opened its first Amazon Go store in 2018 in Seattle and that store was around 1,800 square feet. There are now around 24 Amazon Go stores nationwide.
The store will offer customers a quick and convenient shopping experience to pick up grab-and-go food, snacks and beverage items, and a few everyday essentials. Customers will also have the option to choose from a full selection of beer and wine, including local favorites.
The store will feature the same Just Walk Out cashier-less shopping experience available in other Amazon Go stores, as well as in some Amazon Fresh and Whole Foods Market stores.
Seattle-based Amazon is No. 2 on Progressive Grocer’s 2021 list of the top food and consumables retailers in North America. Austin, Texas-based Whole Foods is No. 26 on PG's list.