Shelley E. Kohan Contributor Retail

I am a retail pundit, business strategist, speaker and professor.

Amazo AMZN -2.4%n delivered a record performance in 2020 with annual revenue up 38% to $386 billion, a yearly increase of over $100 billion. Net profit for Amazon was up 84% for the year as compared to last year. Amazon announced that Jeff Bezos, founder and CEO of Amazon, will transition to the role of Executive Chair in the third quarter of 2021 and Andy Jassy will become Chief Executive Officer at that time. The company’s strengths of integrated digital platforms and extreme proficiency in supply chain management allowed Amazon to pivot swiftly and adeptly to meet shifting consumer demands amidst the pandemic. Amazon is the second-largest U.S. retailer behind Walmart WMT +0.5% which has not reported its financial performance for 2020. However, through the nine months ending October 31, Walmart sales were $407 billion, up 6.5% from the previous year. 

Owning all aspects of the supply chain

The trajectory of Amazon’s growth will accelerate as the company continues to control more of the supply chain and masters last-mile delivery (literally, the last mile(s) before the package reaches the customer’s door); This is the most difficult and complex aspect of fulfillment yet one of the most important touchpoints in terms of customer satisfaction.  

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Early this year, Amazon purchased eleven Boeing 767 passenger jets that are being converted to cargo planes, bringing its total fleet to 85 by the end of 2022; it is the first time Amazon is making an outright purchase as opposed to leasing cargo planes. Between April and August, Amazon Air flights increased 27%. Amazon has been testing drone delivery and offers a program called Amazon Delivery Service Partners allowing people to start their own package delivery business using Amazon’s superior logistics knowledge and technology capabilities. By owning and controlling the major aspects of the supply chain, Amazon becomes less reliant on third-party suppliers like FedEx FDX -0.4%, UPS and USPS, allowing it to shorten its delivery time from click to door. In early 2020, Amazon reduced click to door time from 3.4 to 2.2 days (the industry average is 5.1 days).

Continued innovation and invention

Ubiquitous digitization is a cornerstone of the Amazon success story and the company continues to make investments in unproven inventions. Bezos said, “Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, Marketplace, infrastructure cloud computing, Career Choice, and much more.” MORE FOR YOUThe Legacy That Jeff Bezos Is Leaving Behind At AmazonAI Has Resulted In “Ethical Issues” For 90% Of BusinessesNewsmax Anchor Cuts Off Mike Lindell As Network Braces For Lawsuit From Dominion

AWS continues to grow rapidly

Amazon has led in terms of technological advancements in the retail industry (and in other industries) with one of the most profitable areas being the cloud computing power of Amazon Web Storage (AWS). Operating income for AWS in 2020 was 30% as compared to nearly 4% for North American sales. AWS announced significant customer momentum during the quarter with new commitments and migrations spanning major industries including financial services with JPMorgan Chase JPM +1.7%; media and entertainment with Metro-Goldwyn-Mayer (MGM), Thomson Reuters, and ViacomCBS; technology with Arm and Twitter, to name a few. Brian T. Olsavsky, Senior Vice President and Chief Financial Officer of Amazon, stated, “AWS is growing at a rapid clip both in usage and over many geographic locations.”

The timing of Bezos stepping down is at Amazon’s strongest growth period

Bezos believes Amazon is at its most inventive, stating, “If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention.” All indications are that the company will continue to be super-obsessed with the customer experience and will accelerate the culture of invention.Follow me on Twitter or LinkedIn. Check out my website. Shelley E. Kohan

I have over 25 years of experience in the retail industry across many functions including general management, marketing, operations, merchandising, buying, and human resources. I am an associate professor at Fashion Institute of Technology, Chief Strategy Officer at The Robin Report and CEO/founder of my consulting business. I teach at Syracuse University in Martin J. Whitman School of Management. As a recognized top retail influencer, I have appearances across many media outlets including NBC Nightly News, Forbes.com, Wall St. Journal, New York Times, Women’s Wear Daily, Reuters, The Washington Post, Fortune, and Chain Store Age. I am a contributor to Forbes.com, The Robin Report and a member of the BrainTrust for RetailWire. My interdisciplinary education includes an M.B.A. in Strategic Business Administration from Penn State University, a B.S. in Organizational Behavior from University of San Francisco and an A.S. in Fashion Merchandising and Buying from Fashion Institute of Technology.

Source: https://www.forbes.com/sites/shelleykohan/2021/02/02/amazons-net-profit-soars-84-with-sales-hitting-386-billion/?sh=4e325c6d1334