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Amazon Sees Record-Breaking 2020 Holiday Season

GuruFocus.com
·3 min read

- By Mayank Marwah

Amazon.com Inc. (NASDAQ:AMZN) had a record-breaking 2020 holiday season, which is defined in the sales world as the period from Nov. 1 to Dec. 24.

Although Amazon issued its annual post-holiday press release, the report lacked key information such as number of shoppers, items ordered and average amount of money spent per customer.

The holiday season witnessed billions of items ordered globally by customers online. Online sales were up roughly 47% during the period as compared to last year's holiday season, accounting for 19.7% of retail sales. The company named a few of its top-selling products, which included Echo Dot, Fire TV Stick with Alexa Voice Remote and the Echo Show 5. Other products, namely the iRobot Roomba 675, Lite-Brite Ultimate Classic Retro Toy, Jenga Classic Game, Just Dance 2021, Nintendo Switch Standard Edition and more, were in huge demand as well.


Amazon has extended its return period for holiday season. Products bought between Nov.1 and Dec. 31 can be returned before Jan. 31 without any cost.

Robust third-party sales

The e-commerce platform experienced robust third-party sales. The combined sales by small and medium-sized businesses in Amazon's stores were up 50% as compared to 2019. Amazon said third-party sales have been the "best ever for independent businesses selling on amazon" compared to any other holiday season in the past.

In order to help independent businesses increase their sales on the marketplace, the company invested as much as $18 billion. In addition, the online retailer allocated more than $100 million toward promotional and marketing activities of small and medium-sized businesses. The company said that it incurred operational costs to the tune of $5 billion from the start of the pandemic for independent businesses. In a blog post, Amazon said:


"We invested billions of dollars to help small- and medium-sized businesses continue to grow and to help keep employees safe and deliver products to customers - including more than $2.5 billion in bonus pay to front-line workers."



Amazon's logistics efforts

The e-commerce behemoth announced last year that third-party sellers are prohibited from using FedEx's (NYSE:FDX) ground delivery network for managing Prime shipments, citing a decline in FedEx's ground delivery service performance in times when holiday shipments were huge. This left the sellers with the option of using either Amazon's own network or one of company's other delivery partners.

Amazon's stock has been moving up thanks to the robust logistical improvements it brought to tackle the enormous numbers this holiday season. This will bear a positive impact on the company's long-term growth. Amazon has been pushing to build a strong delivery network in the last few years, given the fact it wants to avoid widespread delays, especially during the holiday season.

To accelerate holiday deliveries to Prime members worldwide, Amazon incurred huge shipping expenses. Going further back, the company experienced shipping charges to the tune of $15 billion during the third quarter, which was 57% higher compared to the same quarter last year. Annual shipping costs will most likely surpass $50 billion.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.