While India was hounding over the Union Budget yesterday, Amazon Inc was busy making history. The online retailer reported a profit of $1.86 billion in the fourth quarter ended December 31-its largest ever-courtesy the millions of new customers added to its Prime fast-shipping club for the holiday season as well as the US President Donald Trump.
The period running from before the US Thanksgiving holiday through New Year was Amazon’s biggest-ever by revenue. Sales rose 38% to $60.5 billion in the quarter, beating estimates, and the company’s net income more than doubled. What came as a pleasant surprise was the provisional $789 million boost to its profits from the tax bill.
Seattle-based Amazon is using fast shipping, television shows exclusive to its website and forays into new technology, such as its voice-controlled Alexa devices, to attract high-spending Prime members.
Prime saw more than 4 million sign-ups in one week alone last quarter, and revenue from subscription fees grew 49 per cent to $3.2 billion. That figure is expected to rise this quarter, in part because the company recently raised the fee for month-to-month Prime plans, affecting some 30 per cent of subscribers.
-according to analysts at Cowen & Co.
Its Indian subscribers have also been growing in leaps and bounds. According to media reports in October 2017, Prime’s membership in India had grown almost five times since the beginning of the year.
Perhaps the surprise star of the past quarter was Amazon’s voice aide Alexa, embedded in the company’s Echo speakers and Fire TV players, as well as some cars and house gadgets. Millions of Amazon customers ordered goods by voice with Alexa in the past year. “Our 2017 projections for Alexa were very optimistic, and we far exceeded them,” said Jeff Bezos, Amazon’s founder and chief executive, in a statement. “We don’t see positive surprises of this magnitude very often-expect us to double down.”
The e-tailer added that:
We expect an operating profit in the current quarter of between $300 million and $1 billion, though analysts were expecting $1.5 billion.
But as Brian Olsavsky, Amazon’s chief financial officer, told the media:
The company remains in heavy investment mode. It is expanding its retail footprint outside the United States, particularly in India, and almost doubled its international operating loss to $919 million in the fourth quarter. Not for nothing is the company earning infamy for squeezing competitors by running on low profit margins.
But in India, Flipkart remains the poster child for e-tailing. According to a new report by Smartkarma Insight Provider Euromonitor International Ltd, Flipkart Online Services maintained its leading position in internet retailing in 2017.
The retailer continued to ride on its first-mover advantage, which helped it to have immense brand recall amongst consumers. The rivalry between these two rivals spells good news for the consumers. In 2017 alone, online retailing in India increased by 35 per cent in current value terms, to reach Rs 1,959.7 billion.
The latest Economic Survey sees India’s ecommerce market crossing Rs 2,117 billion in this fiscal. More significantly. Euromonitor expects about half of India’s population to be online by 2021, up from around 30% in 2016-with a majority hailing from rural areas and smaller towns-by which time the Internet retailing market size is likely to balloon to around Rs 4,000 billion.
