Jassy: Amazon's Retail Business Is 'Being Slept On' by Investors

Amazon's online store net sales grew 2% year over year to $68.5 billion in the third quarter, a modest pace that CEO Andy Jassy argues hides a stronger story. Physical store net sales matched that growth rate at 2%, reaching $5.7 billion, according to a Thursday press release.

Jassy, who spent much of the analyst call discussing Amazon Web Services and AI investments, pushed back on the notion that retail has become an afterthought. "In stores, I think some folks are sleeping a bit on how much progress that business has made and what it's become in the last few years," Jassy said on the call. "I'm not aware of another retail business approaching Amazon's revenue size — hundreds of billions of dollars, with double-digit operating margins inclusive of ads — that's growing at this pace."

It's a bold claim, and worth stress-testing: the 2% growth he's defending is the slow-looking headline number, even if the margin and scale points hold up.

Where is growth actually coming from?

Fresh groceries and everyday essentials grew three times faster than the rest of the store business. The driver is behavioral: customers who buy perishables through same-day delivery purchase nearly seven times more essential units than those who don't.

That pattern matters beyond the quarter's math. "This is an important shift as it allows Amazon to win in a category that offers regularity and repetition," GlobalData Managing Director Neil Saunders said in emailed comments Thursday. "That, in turn, makes Amazon stickier, makes the fulfillment network more efficient, and improves perceptions around the value of Prime and other services."

In plain words: get households into weekly grocery habits and the rest of the cart follows.

One caveat sits under the headline number. Amazon shifted its Prime Day event from Q3 to Q2 earlier this year, which pulled the retail sales and ad revenue benefit out of the quarter and made the year-over-year comparison tougher.

What role does Alexa play?

Alexa for Shopping, which expanded its capabilities this week ahead of the holidays, is gaining usage among Amazon shoppers. Jassy cited a concrete spending gap on the call.

"U.S. customers using Alexa for Shopping are spending 50% more per order than those who don't," Jassy told analysts. "Though we anticipate working with horizontal agents, we believe Alexa for Shopping is going to be the primary shopping agent customers use to shop Amazon."

That's a promise about a future agent-led shopping model, and it rests on usage habits that are still forming. No adoption figures accompanied the claim.

What about the job cuts?

The bullish talk follows a quieter move. Earlier this month, Amazon cut hundreds of jobs in its retail division. A spokesperson said at the time the company was adjusting parts of the store business to create a structure it hopes "will better enable us to deliver on our priorities."

So the growth thesis and the headcount reduction land in the same month — a reminder that efficiency, not just expansion, is part of the retail plan.

Telsey Advisory Group analysts, in a Friday note, said Amazon's retail market share could continue to grow as long as it leverages its Prime member base. "Amazon's ability to fuel key growth opportunities—grocery, pharmacy, logistics, ads, and AI/tech infrastructure—should make it more valuable," the analysts said.

The bet, in short: grocery habits, voice shopping and Prime stickiness keep the store business compounding even when headline growth looks flat.