The runaway success for Amazon in the past year has been the rollout of their regionalized fulfillment network. At Amazon scale, you cannot underestimate the difficulty of this transition. Sounds like the results have exceeded even their most optimistic expectations on costs to serve, speed, and customer satisfaction.

An underappeciated "bet the company" gamble. Without Clark or Wilke. Deep bench much?

Faster shipping increases purchase frequency and range of merchandise purchased.

Overall Q3 2023:

* Net Sales up 13% y/y to $143 B, up from $127.1B Q3 2022

* Operating income increased to $11.2B in the third quarter, compared with $2.5 billion in 3Q 2022.

NA/Domestic:

* Increased 11% year-over-year to $87.9 billion.

* Operating income was $4.3 billion, compared with an operating loss of $0.4 billion in Q3 2022.

International:

* Finally hit almost breakeven.

On the economy, consumers are still cautious about price and trading down. Lower discretionary spending.

The headlines from Q3 2023 earnings are logistics, AWS, and advertising.

Logistics:

* Fastest delivery speed for Prime in 29-year history (note to Andy: Prime 18 years old but I know what he means).

* Growth in consumables and everyday essentials fueled by changing consumer behavior - faster delivery = higher purchase frequency.

* Light on stats, but better in stocks and placement than expected.

* Best October kick-off event ever. 375M items purchased.

* Will hire 250,000 full-time, part-time, and seasonal employees in the U.S. this holiday season.

* Costs to serve reduction helped by lower rail, ocean, and line haul prices.

AWS:

* Grew 12% y/y, which is solid but flat q/q growth on a yearly comparable basis.

* Profitability helped by headcount reductions in Q2. Improved profitability 600bps q/q.

* Now a $92B run-rate business. At 30% operating margin. That is ridiculous. Thank you AWS.

* You can tell Andy’s passion is with AWS. The call is like AWS with a few other things he is required to speak about. He will go on for 15 minutes on AWS and AI, and spend 5 seconds on logistics.

* See Generative AI as a “tens of billions” revenue opportunity in the future. So early.

Advertising:

* Grew 25% y/y, very solid, accelerated from 22% y/y last quarter.

* $50B run-rate business. Unbelievable, growing faster than AWS, and at higher operating margins (probably 50%+ but not shared).

Odds and Ends:

* 3P seller revenue grew 18% y/y

* Thursday Night Football 25% higher ratings than last year.

* Prime Video is one of the top two drivers of people signing up for Prime.

* Buy With Prime gets a mention.

* Not a single mention of Physical Stores or Grocery. No questions about it. Analysts officially gave up on them. 👀

Q4 Guidance

* Grow between 7-12% y/y expected. Solid guidance, perhaps on the lower end of the range, but it's on the upper end of the UPS range of 4 to 12%.