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Amazon reports growth for Alexa and Prime, plus more warehouse investments

The Alexa network is expanding, Prime members are getting faster service, and warehouse investment may ramp up

Illustration by Alyssa Nasner

Amazon’s earnings call yesterday, which offered greatest hits from the previous year and quarter as well as guidance for 2019, highlighted the momentum the company has going into the new year. While its stock took a slight hit in after-hours trading, due to new hurdles for international expansion and a prediction that its revenue projections would slip slightly in 2019, it still announced profits of $3 billion on sales of $72.4 billion, a 20 percent year-over-year increase.

The company is expanding on multiple fronts, from its growing web service division to smart home devices in the Amazon Echo lineup. Here’s a breakdown of how Amazon’s trajectory will continue to impact our homes and cities.

Amazon Echo on nightstand
The second-generation Amazon Echo.

Smart home devices continue to shine

The company’s voice assistant Alexa continues to evolve and take over more and more of the smart home market. “Alexa was very busy during her holiday season,” CEO Jeff Bezos notes during the call. There are now 28,000 Alexa-compatible smart home devices, and the number of devices with Alexa built in more than doubled in 2018. New outlets for voice give the company a bigger lead in the still-nascent world of voice commerce.

Amazon has also pushed new tech that will allow it to make home deliveries more efficiently. Key by Amazon, a digital deadbolt and smart lock system, expanded with business-to-business options and a consumer garage option that can be used to facilitate home deliveries. In addition, Ring, the company’s smart doorbell, saw its best quarter ever, selling millions of devices globally, especially the new Ring Video Doorbell 2, and the new indoor/outdoor Stick Up camera began shipping to customers.

Amazon’s logistics empire will continue to grow

Unsurprisingly, Amazon’s warehouse and shipping network have and will evolve to make allow for even more instantaneous deliveries. Look at its Prime program, which offers free, expedited shipping to more than 100 million members worldwide. Last year, the company expanded same-day and 1-day shipping options in 10,000 U.S. cities, and currently, a majority of members have access to “free one-day shipping or faster.” Now, two-day shipping has become commonplace among other retailers.

This was done in part by increased efficiencies—Amazon’s direct purchases of property and equipment rose just 3 percent last year, as The Street noted—and expanding its delivery network. The company leased 10 more jets for deliveries, opened a new gateway operations center at an airport in Riverside, California, to help speed up shipping and delivery, and will open three more of these centers in 2019: Wilmington, Ohio; Alliance, Texas; and Rockford, Illinois.

More real estate investment

Amazon had scaled back on investments last year, but during the call, CFO Brian Olsavsky suggested the company will ramp up real estate investments this year. Continued growth tends to parallel continued warehouse investment, suggesting more investment in the red-hot warehouse sector.

Jason Tolliver, vice president and head of industrial research for the americas for Cushman & Wakefield, said 2018 was the strongest year of growth when it came to industrials and warehouses on record, and expects more of the same in 2019.