Amazon Going All in On Agentic, Delivers Great Quarter
First things first, Amazon revealed that it will cooperate with third-party agents at some point, and it's already negotiating terms. I read this as OpenAI. So, the last domino has essentially already fallen.
Layoffs:
* It was always about culture. 14,000 cultural misfits.
So, ... it's day 2, and we fired some people. Got it. That AI thing was a big media head fake.
Agentic:
* Rufus has generated $10B in incremental annualized sales. (would love to see this attribution model)
* Rufus monthly users up 140% y/y, and interactions up 210% y/y.
* Rufus customers 60% more likely to complete a purchase. (!!) This stat is wild.
* Amazon believes agentic will "expand the amount of shopping done online" and that will ultimately be great for Amazon since we have our traditional value prop of wide selection, great value, and quick delivery.
* Throws shade on existing agentic experiences: no personalization, no shopping history, wrong delivery estimates.
* "We’re also having conversations with and expect over time to partner with third-party agents. " Boom.
* "reminds me in some ways of the beginning of search engines many years ago being sources of discovery for commerce, and you had to figure out the right ways to work together." (like cutting off Google Shopping/ads every few years to test things)
* If you know what you want to buy, there are few experiences that are better than coming to Amazon.
* I think AI and agentic commerce are going to change the experience online where you’re narrowing what you want when you don’t know is going to get better online than it even is in physical environments.
Amazon feels agentic will be best at research and narrowing choices for consumers.
Financials:
* Revenue WW $180.2 billion, a 12% increase y/y ex-FX
* Excluding layoffs + settlement, WW op income would have been $21.7 billion or $1.2 billion above the high end of our guidance range.
* In the North America segment, third quarter revenue was $106.3 billion, an increase of 11% year-over-year.
Marketplace:
* worldwide third-party seller unit mix was 62%, up 200 basis points from Q3 of last year.
* 14% more selection since last q from brands like North Face, etc.
Supply chain:
* On track to deliver fastest speeds ever for Prime members in 2025.
AWS:
* Project Rainier has ~500k Trainium2 chips, on track for 1M by end of year. (Doesn't Elon have 220k?). (Anthropic)
* Throwing shade on faster growing competitors with a much smaller base.
* AI has re-accelerated AWS growth to 20.2%
Grocery and Essentials:
* Everyday Essentials growing 2x rest of business (hello? wouldn't this match Walmart's growth)
* Really pushing perishables into unified cart into same-day facilities. Expanded that to 1,000 cities around the U.S. and will be in 2,300 by the end of the year.
* Claims it is a top 3 grocer even if you don't consider Whole Foods.
