Amazon.com, Inc. (NASDAQ:AMZN) Q3 2020 Earnings Conference Call - Final Transcript
Oct 29, 2020 • 05:30 pm ET
At this time, we will now open the call up for questions. [Operator Instructions]. Thank you. Our first question comes from Brian Nowak with Morgan Stanley. Please proceed with your question.
Thanks for taking my question. I have two, Brian. Just, the first one you mentioned that fulfillment center saw a good leverage in the quarter, can you just talk to us about some of the -- some of the qualitative drivers of this improvement you're seeing and fulfillment cost per fulfilled unit in the quarter and sort of year-to-date and how to think about the durability of that over time.
And then secondly, I think throughout the summer, Amazon Logistics launched the third party delivery service in the U.K. Curious just to hear about sort of early learnings from that product and how you think about scaling that to other countries and maybe globally. Thanks.
Brian T. Olsavsky
Sure, Brian. Thanks for your question. So yeah, the fulfillment center cost is going to be a blend of the COVID-related -- part of the COVID-related costs that I've mentioned and itemized, offset by some really strong leverage. I would say that we've been running very consistently high levels really since all of our employees were -- came back in the first or second week of May and its focus on -- had been on unpaid leave.
The -- so that demand is very consistent and strong and has created a lot of favorable leverage because again, the order pattern being high and consistent leveraging our fixed cost assets. Things like our delivery routes are more dense at high volumes. So we see even in transportation some increased efficiencies. Offsetting that again is productivity elements that we've articulated things like social distancing, extended breaks, other steps we're taking to keep people safe and distanced in our facilities and in our delivery network.
And this is Dave, I don't have much to share I think on what we've got going on with any of those AMZN [Phonetic] efforts, other than I'd just say we're always working to develop new and innovative ways to support the companies we work with doing small, medium-sized businesses who sell on Amazon. And that includes testing shipping programs that can help any of these businesses get packages to customers quickly and reliably.
Great. Thank you both.
Our next question comes from Doug Anmuth with J.P. Morgan. Please proceed with your question.
Thanks for taking the questions. Brian, just wanted to go back to the 4Q operating income guide. I appreciate your thoughts there. Was trying to dig a little bit deeper in terms of how you're thinking about it, kind of beyond the $4 billion in COVID costs. It still feels like maybe there was some more in there that we're not thinking about perhaps beyond the square footage increases and the incremental head count. So if you have any comments there.
And just curious, I know it's early on 2021, but you've obviously done a ton of investment this year