Amazon sales kindled by net's growing ubiquity

Amazon's sales jumped 51% in the last quarter - its fastest growth in more than a decade. Proof that it can still keep pace with upstarts like Facebook...

by Dave Waller
Last Updated: 06 Nov 2012
It may be a senior citizen of the internet, but Amazon won’t be kicking back and milking its pension just yet: sales leapt to $9.9bn in the quarter to the end of June. The figures beat even the most positive Wall Street forecasts, showing just how much loot there is to be made in a fragile economy when you’re offering bargain-conscious customers low prices and minimal hassle.

It’s a formula that seems to be working. Amazon's the world’s biggest online retailer by market value these days. And it must know it’s on to a winner when its real-world-based rivals like Walmart and Best Buy are left sniping about its success, getting their feathers ruffled over how it’s benefiting unfairly from a loophole that means many of its US customers avoid paying sales tax. Yet sales grew at the same pace in Amazon’s international businesses, which made up 45% of total revenue.
Amazon offered an alternative explanation for its glowing results. According to CEO Jeff Bezos they were driven by ‘low prices, expanding selection, fast delivery and innovation’. Then there’s the success of the Kindle e-reader, which is becoming an increasingly common sight as tech-wary bookworms realise they’re not quite as attached to the dog-eared paperback as they first thought.

There is a footnote here though. Amazon’s net income actually slipped 8% to $191m, thanks to a sharp rise in operating expenses - proof that it’s not a cheap business staying ahead of the game in e-commerce. As usual Amazon has been busy investing in new distribution centres, investment in the Kindle and cloud computing services. Of course it’s unlikely to maintain that pace of investment forever, so it should soon start reflecting in the profits too.

So the net’s veteran is as vital as ever. And is it really going to change? The longer the economy remains sketchy, the more people will steer clear of the high-street and put time into spotting those bargains. E-commerce isn’t a niche activity any more. And if the same is one day said of paperbacks, Amazon will be laughing even harder.

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