But the fastest-growing part of Amazon’s workforce has nothing to do with stocking and packing products. Sales jobs at the company’s cloud and advertising businesses are growing at a faster pace than any other position, Amazon said in its earnings call last week.
“The sales force [for AWS and advertising] has grown higher than the rate of growth in the business itself,” Amazon CFO Brian Olsavsky said during the call.
The growth in the company’s sales force for its sprawling cloud and advertising units shows Amazon’s focus on expanding two of its fastest-growing and highest-margin businesses. It also suggests Amazon is signing up larger corporate customers who pay larger checks.
In fact, Olsavsky said during the earnings call that more salespeople are needed in those businesses as Amazon goes beyond customers who rely on self-serve tools to the ones that need individual sales contacts and support. Business customers typically speak to salespeople before making purchasing decisions.
“We built self-service tools and obviously we want to make those as efficient as possible for customers and advertisers, but we realize that we will need actual sales contact with the accounts as well,” Olsavsky said.
BMO Capital’s Dan Salmon says the hiring pace indicates “big ambitions” for Amazon’s advertising and cloud businesses. Its cloud unit, Amazon Web Services, is already a market leader, while its advertising business is just starting to gain steam.
AWS generated $4.1 billion in revenue last quarter and is now on pace to exceed $16 billion in annual revenue this year. Amazon doesn’t break out the size of its advertising business, but Salmon expects it to grow over 60 percent year-over-year, generating $3.5 billion and $5.7 billion in 2017 and 2018, respectively.
On top of that, both units are starting to sign up bigger customers who tend to sign bigger and longer paychecks. Salmon pointed out that some big manufacturing and consumer goods companies are already paying for ads on Amazon, and those customers prefer to buy through advertising agencies who deal with salespeople.
Hiring more salespeople could be costly in the near term. Given Amazon’s marketing cost already jumped 44 percent last quarter, hiring more salespeople could add even more pressure to the company’s bottom line. But Salmon says the projected growth rate of both businesses are more than enough to offset any potential increase in sales and marketing costs.
“If hiring some salespeople in the advertising and cloud businesses drive significantly more revenue than those people are paid, it’s ultimately a nice and profitable business for them and I think everybody would cheer that,” Salmon told CNBC.
Commodities February 10, 2021