Amazon sales surpassed all estimates for the second quarter, proving that shoppers continued to turn to the online giant during the COVID-19 pandemic. Reporting after the closing bell Thursday, Amazon's net sales increased 40% to $88.9 billion in the second quarter, compared with $63.4 billion in the second quarter of 2019.
Grocery sales were also a bright spot during this time period. Amazon increased grocery delivery capacity by over 160% and tripled grocery pickup locations to support customers not wanting to shop in stores during COVID-19. The result was that grocery sales tripled in the second quarter when compared with the same period last year.
Amazon noted that it's continuing to work closely with the U.S. Department of Agriculture to expand access to online grocery shopping for people who rely on Supplemental Nutrition Assistance Program (SNAP) benefits. Amazon now offers online SNAP in 39 states and the District of Columbia.
Amazon's physical stores suffered the same fate as many other retailers during the second quarter. Physical store sales were down 13% to $3.774 billion compared to $4.330 billion compared to the second quarter of 2019. A portion of the decline may be attributed to how Amazon reports physical store sales. Unlike other retailers, Amazon's physical store sales reflect only those sales where customers physically select items in a store. Orders placed online with Whole Foods Market, either for curbside pickup or delivery, are classified as online sales. The approach is opposite of how retailers such as Kroger, Walmart or Albertsons account for digital sales and tends to obscure the true performance of Whole Foods, especially as more shoppers choose digital methods of fulfillment.
As founder and CEO Jeff Bezos predicted earlier this year, Amazon spent over $4 billion on COVID-19-related costs during the second quarter, including personal protective equipment, increased cleaning, new safety process paths, backup family care benefits and bonuses to front-line employees and delivery partners.
"This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe," said Bezos. "We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, fulltime positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.”
Amazon's operating income increased to $5.8 billion in the second quarter, compared with operating income of $3.1 billion in second quarter 2019.
Amazon has adjusted its third quarter guidance, expecting net sales between $87 billion and $93 billion, between a 24% and 33% increase compared with last year. The retailer also plans to spend more than an additional $2 billion in costs related to COVID-19 during the third quarter.