Amazon has reported earnings for Q4 2018, revealing that it recorded a net income of just over $3 billion, marking the third consecutive quarter that it’s broken its profit record, according to The Wall Street Journal.
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Its online store sales category grew 14% year-over-year (YoY) excluding exchange rates — an acceleration that snaps a four-quarter-long streak of deceleration. Internationally, its net sales also accelerated, growing 19% YoY and reversing another yearlong pattern of decelerating or flat growth.
The end of Amazon’s slipping US online sales is fantastic news for the retailer and may be due to its performance during the holidays. The previous year of deceleration was reason to worry about the possibility that Amazon’s baseline sales had grown so massive that flat growth might be imminent, but this quarter’s performance allays this suspicion.
The e-tailer took several steps during the extremely important holiday season that may have caused these results. For example, it made free shipping with no purchase minimum available to non-Prime members and distributed a physical toy catalog. Meanwhile, its rapid shipping for Prime members allowed them to shop until very close to Christmas. Additionally, Q4 2018 was Amazon’s best quarter on record for Prime sign-ups, Amazon Director of Investor Relations Dave Fildes said in an earnings call.
Amazon attributes its international growth in Q4 to the Indian festive season, but also put initiatives in place that may have helped. The primary growth driver for Amazon’s Q4 international sales was that the Indian festival Diwali took place entirely in Q4 2018, whereas in 2017 it was split between Q3 and Q4, CFO Brian Olsavsky said in an earnings call.
However, during Q3, Amazon also took steps to foster international growth, such as rolling out support for the Hindi language on Amazon India and introducing new Prime subscription options in Canada, Mexico, China, and Germany. These efforts may have contributed to international growth, and, if they managed to generate more Prime sign-ups, could be harbingers of even more international sales in the future.
While Q4 was highly positive for Amazon, it will need to keep its foot on the gas to beat potential roadblocks in the future.Prime’s growth has been decelerating as the sheer volume of members reduces the remaining addressable market. This means that Amazon should buckle down on growing membership abroad to avoid Prime’s trajectory flattening out.
Additionally, new e-commerce regulations in India just took effect that are forcing Amazon to rework its entire business model, raising questions about its future in the country. Both of these issues are obstacles Amazon will have to confront in 2019 and beyond as it seeks to further dominate e-commerce in the US and abroad.
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Source: Business Insider