Amazon Q3 Earnings Analysis

Amazon Q3 Earnings Analysis: Ecommerce Tailwinds Dissipate 

Matthew Boardman
Latest posts by Matthew Boardman (see all)

For the first time in its history, Amazon reported negative Q2-to-Q3 growth, with Amazon Q3 earnings showing decreases to both top line and bottom line performance year-over-year. The disappointing results were followed by a 4.3% drop in shares. 


  • Net sales increased 15% YoY to $110.8B compared to $96.1B in Q3 2020 
  • Operating cash flow decreased 1% for the trailing twelve months 
  • Operating income decreased from $6.2B in Q3 2020 to $4.9B in Q3 2021 
  • Amazon’s net income decreased $3.2B in Q3 2021 compared to $6.2B Q3 2020 


  • North American net sales grew 10% YoY, down from 36% growth YOY in Q2 
  • International sales grew 16% YoY 
  • The “Other” segment, which consists largely of Amazon advertising revenue, grew 50% YoY  
  • AWS grew 39% YoY 
  • Revenue from Amazon services (advertising, AWS, third-party seller services, Prime) collectively reached $55.9B, exceeding Amazon retail sales ($54.9B) for the first time ever 

Amazon Marketplace Highlights 

  • Third-party seller services grew 19% YoY 
  • Amazon first-party sales were up 4% to $49.9B in Q3 
  • Amazon has nearly doubled the size of its fulfillment network in the past year 

Amazon’s financial guidance forecasts relatively humble net sales growth in Q4 2021, between 4% and 12%. Amazon’s guidance also states that operating profit will be between $0 and $3B, down from $6.9B in profit in Q4 2020. 

Lessons from Amazon Q3 Earnings for Sellers

The global pandemic drove massive gains for ecommerce in 2020 and the first half of 2021, but it seems that shoppers are reverting to pre-pandemic spending habits. If Q3 is any indication, Amazon as a whole will continue to grow in Q4, but at much slower rates than 2020 and the first half of 2021. 

Black Friday & Cyber Monday Predictions 

In 2020, many shoppers shifted their Black Friday spending from in-store to online, with online sales surging 22%. Based on Q3 performance, shoppers may return to in-store deals for Black Friday and save online shopping for Cyber Monday. The expansion of “buy online, pickup in store” (BOPIS) from the likes of Target and Walmart may further erode Amazon’s Black Friday sales. 

Of course, Amazon won’t cede this ground easily. To mitigate this risk – as well as risks caused by the supply chain – Amazon launched Black Friday deals nearly two months early, followed closely by Target and Best Buy. 

Earlier this year, Salesforce forecasted global ecommerce sales will reach $1.2 trillion. Marketplace Pulse notes that Amazon is better positioned to maintain inventory throughout the holidays than brick-and-mortar competitors, in part because they have multiple sellers carrying the same or similar product. If one seller runs out, another can replace them. This is troubling for the seller, but consumers will hardly notice the difference. 

Q4 Winners Will Be Those With Diversified Fulfillment 

Since the start of the pandemic, Amazon has nearly doubled its fulfillment network, yet FBA inventory limits remain problematic. Black Friday, Cyber Monday, and the holiday season in general will drive sales up, to the point that inventory levels at FBA may fall dangerously low. 

To prevent stock-outs and downed product listings, sellers need to have temporary storage outside of FBA. These warehouses might simply be holding facilities from which to restock FBA, or they may also double as FBM solutions, fulfilling orders directly to consumers. Sellers with these capabilities will be better positioned to capture sales throughout Q4, while their FBA-dependent peers may fall out of the Q4 race early. 

This holds true for Amazon advertising as well. Despite persistent issues in the supply chain, sellers are still ramping up their Q4 ad spend. The trick will be to balance ad spend so that sales velocity doesn’t overtake inventory levels. Sellers who have diversified their fulfillment strategy will be better positioned to market more aggressively, while those with limited inventory or FBA reliance will have to play a more cautious game. 

Marketplace Earnings Reviews

Read our breakdowns of Amazon Q2 2021 Earnings Report, Amazon Q1 2021 Earnings ReportAmazon’s Q4 2020 Earnings Report, and Amazon’s Q3 2020 Earnings Report.

Want something even more comprehensive? Download the complete State of Amazon: 2021 Report!

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More About the Author

Matthew Boardman
Latest posts by Matthew Boardman (see all)