Amazon Q3 2024: Growth Driven by E-Commerce, Fulfillment Innovations, and AI-Powered Services

Amazon’s Q3 2024 performance highlights its continued dominance across multiple sectors, including e-commerce, fulfillment, advertising, and AI. With net sales growth of 11% year-over-year to $158.9 billion, Amazon demonstrated the effectiveness of its innovations in delivery speed, inventory management, and customer engagement. The quarter also marked significant milestones in Prime membership growth, fulfillment efficiency, and AWS capabilities, setting the stage for sustained momentum into Q4.

Q3 2024 Performance 

Net Sales Growth: Amazon’s net sales increased by 11%, reaching $158.9 billion, compared to $143.1 billion in Q3 2023. The North America segment led the way with a 9% increase, contributing $95.5 billion to overall sales.

E-Commerce Sales: Online store sales rose 7.2% to $61.4 billion, while physical store sales grew 5.4% to $5.2 billion, driven in part by the success of Amazon’s Prime Day sale.

Third-Party Seller Services: Revenue grew 10.3% to $37.9 billion, reflecting the increasing role of Amazon’s marketplace.

Advertising: Advertising revenue surged 18.8% to $14.3 billion, further establishing it as a key profitability driver.

AWS Growth: AWS revenue increased 19.1%, contributing significantly to Amazon’s overall net income, which rose more than 55% to $15.3 billion.

Key Highlights 

Delivery Strategy: Redefining Speed and Customer Expectations

Amazon’s Q3 2024 results highlight its relentless focus on enhancing delivery capabilities, particularly through the expansion of same-day delivery facilities. Over 40 million customers benefited from free same-day delivery this past quarter, marking a 25% year-over-year increase. This strategic investment not only delivers unparalleled speed but is also one of Amazon’s lowest-cost ways to fulfill orders, underscoring its efficiency-driven approach.

In line with its commitment to innovation, Amazon announced a $2.1 billion investment in its Delivery Service Partner program in North America, alongside 25 billion yen in Japan to drive last-mile delivery innovation, safety initiatives, and technology enhancements for drivers. This focus aligns closely with Incisiv’s insights, which reveal that last-mile delivery is a critical component of any e-commerce strategy. According to Incisiv’s Catalyzing Growth: How Last-Mile Delivery Increases Revenue, Loyalty, and the Bottom-Line report,

• 76% of consumers prioritize delivery speed as a key factor in purchase decisions.
• A 10.6% increase in average order value and an 8.9% improvement in conversion rates are directly tied to superior last-mile delivery experiences.
• While 90% of customers view 2-3 day delivery as the standard, 30% now expect same-day delivery, reflecting the growing demand for instant gratification.

As seen in Amazon’s approach, prioritizing speed and reliability in delivery is not just a customer convenience but a key driver of e-commerce success—a trend we Predict and mention that last mile delivery should be part of your e-commerce strategy. 

Fulfillment Innovations

As highlighted by Grocery Doppio’s insights, poor inventory visibility costs the grocery industry $7.4 billion annually, emphasizing the critical need for streamlined inventory management. 

Amazon’s investments in its fulfillment network provide a compelling example of how addressing inventory challenges can drive measurable results and improve operational efficiency.

In Q3 2024, Amazon reported a 25% year-over-year improvement in inventory distribution, achieved through strategic inventory placement across fulfillment centers. This improvement reduced costs and enabled faster delivery, showcasing the importance of optimizing fulfillment processes. Additionally, Amazon launched its 12th-generation fulfillment center in Shreveport, Louisiana, featuring advanced robotics for stowing, picking, and packing. This facility integrates cutting-edge automation to enhance efficiency across the supply chain.

To further improve efficiency, Amazon’s outbound regionalization strategy brought items closer to customers, increasing shipping efficiency and lowering transportation costs. These advancements underscore the value of innovative fulfillment practices and validate the findings of Grocery Doppio’s research.

Advertising as a Profit driver 

Advertising remains a cornerstone of Amazon’s profitability, with Q3 2024 revenue reaching $14.3 billion, a significant 18.8% year-over-year increase. Amazon’s ability to integrate advanced technologies into its advertising ecosystem continues to set it apart as a leader in retail media.

Generative AI Tools: Amazon introduced generative AI-powered creative tools, enabling advertisers to efficiently produce engaging display, video, and audio campaigns. These tools highlight the growing role of AI in marketing, aligning with Grocery Doppio’s AI in Grocery 2024 Study, which projects that AI adoption will unlock $19.3 billion in marketing opportunities across the industry.

Prime Video Advertising: The launch of Prime Video ads established a new revenue stream, leveraging Amazon’s vast media ecosystem to drive advertising success.

According to Grocery Doppio’s State of Industry Digital Grocery: In- store Media Monetization, the Retail Media Network (RMN) market is projected to reach $54 billion in 2024, with grocery media networks contributing $8.5 billion. This indicates a significant shift as 69% of grocers identify media networks as a path to profitability for their organizations. Amazon’s success in growing its advertising revenues underscores the importance of RMNs in driving profitability.

Furthermore, 61% of shoppers surveyed found media content useful, reflecting the effectiveness of targeted campaigns in enhancing the customer journey. 

Amazon’s seamless integration of AI-driven advertising and RMN capabilities provides a roadmap for U.S. grocers to capitalize on this high-growth opportunity. 

Price-Conscious Shoppers drive Prime Membership 

Consumers today are highly price-conscious, with 93% of shoppers focusing on value and 57% willing to switch retailers if they find a better price, according to Grocery Doppio’s insights. Additionally, 84% of shoppers report that limited-time deals related to delivery and fulfillment influence their purchasing decisions, when deciding where to shop. Amazon has strategically embraced these consumer preferences, integrating them into its Prime membership offerings to drive growth and loyalty.

Prime Day Success: During the tenth annual Prime Day event in July, Amazon saved Prime members over $1 billion, offering highly attractive limited-time deals.

Fuel Savings and Exclusive Deals: For the first time, U.S. Prime members benefited from fuel savings of 10 cents per gallon at select locations, providing a tangible example of Amazon’s ability to enhance value.

Stickier Consumer Behavior: Fast delivery, larger basket sizes, and repeat orders were significant contributors to the value of Prime membership, driving long-term customer retention. Grocery Doppio’s research highlights that 93% of shoppers focus on relevant promotions, and Amazon’s targeted offers have ensured that members continue to see value in staying loyal.

Amazon’s ability to address these shopper preferences by combining better pricing, faster delivery, and value-driven deals has led to accelerated Prime membership growth in Q3.

.AI-Powered Innovations and AWS

Amazon’s advancements in AI and cloud technology continued to redefine its operations:

Generative AI Tools: Features like AI Shopping Guides simplify product research for customers, while Project Amelia provides sellers with tailored business insights.

AWS Growth: AWS revenue reached an annualized run rate of $110 billion, with triple-digit growth in its generative AI business. Amazon also debuted new foundation models in Bedrock and SageMaker, solidifying its leadership in cloud-based AI services.

Future Outlook

Amazon’s strategic initiatives in fulfillment, AI, and customer-centric innovations set the stage for robust growth in Q4 and beyond. The company projects Q4 net sales growth of 7% to 11%, reaching between $181.5 billion and $188.5 billion, reflecting continued momentum across its retail and cloud businesses. To support this growth, Amazon plans to allocate $75 billion in capital expenditures in 2024, with the majority directed toward its AWS infrastructure and fulfillment and transportation networks.