Amazon lifts quarterly income 1025 per cent

Online marketplace Amazon grew net sales 29 per cent to US$56.6 billion in the third quarter of 2018, compared to $43.7 billion in sales in the previous corresponding period.

Net income rose 1025 per cent year-on-year to $2.88 billion in the quarter, up from $256 million in the same quarter last year.

“Amazon has produced another set of numbers that will no doubt make other retailers green with envy,” GlobalData Retail managing director Neil Saunders said.

“However, by its own historical standards, there are some areas where performance feels a little light. This is most noticeable on the top line, where net sales growth has moderated to 29.3 per cent.

“While this is still a very credible result, this is the weakest growth rate in over a year and represents a material slowdown from the past three quarters.”

The marketplace’s sales from digital offerings, such as books, music, videos, games and software, sold on a transnational basis, grew by just 10 per cent for the quarter to $29 billion, while sales tied to subscription services grew by 52 per cent to $3.69 billion.

Sales from Amazon’s North American arm reached $34 billion, contributing $2 billion to its operating income, while sales from the company’s international business led to a $385 million loss.

According to Saunders, Amazon is now on a natural maturation curve, and customers are less price sensitive, meaning fewer customers are coming to Amazon for lower prices.

“However, by far the most significant reason is that there is more online competition in online retail than there has ever been, and that competition is more effective than it has ever been,” Saunders said.

“Our own data shows that online consumers are now using more online retail sites than a year ago, and spend is being spread more thinly among a greater number of internet retailers.”

Looking toward the fourth quarter, Amazon has forecasted net sales of between $66.5 – $72.5 billion – a growth of between 10 and 20 per cent on the Q4 2017.

Operating income is expected to be slightly ahead of Q4 2017’s $2.1 billion, at $2.1 – $3.6 billion.

This story first appeared on our sister site Inside Retail Australia.

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