Amazon Sees Five Straight Quarters of Growth
Last week, Amazon revealed a stellar fifth straight quarter of growth. The e-commerce giant’s earnings per share increased to $1.78 from $1.07 and beat the consensus forecast by a whopping $0.64/share. According to the company, it closed Q2 earning a record-setting $857 million or $30.4 billion in total revenue and overtaking Exxon
as the fourth most valuable US company.
One contributing factor to Amazon’s growth story is the company’s sales in North America, which comprise nearly 50 percent of its net revenue. It’s also worth noting that international sales grew 30 percent over the past year, which is notable, considering Amazon Prime’s recent entry into the Indian market. CEO Jeff Bezos mentioned
the company’s growth in India is a “major driver of its international strategies moving forward” and has also pledged to invest $5 billion in its Indian operations.
Looking ahead, it’s clear that Amazon will continue to do well, but as our own Natalie Kotlyar said in an interview with RetailDive
, “The question is how well.” Surely Amazon’s growth trajectory is impressive; however, it is worth mentioning that the company doesn’t just grow for the sake of growth. In a separate interview with Retail TouchPoints
, Natalie pointed out that Amazon recognizes poor performance and values strategic expansion: “They are quick to respond even when something doesn’t go right, and a perfect example of that would be their flash sale site MyHabit. It didn’t go the way they expected, and they closed it down. One of the biggest mistakes some retailers make is growing for the sake of growth. They grow to have more stores, and sometimes they lose sight of the fact it’s not always a good thing. If they have too many stores open, some may be underperforming, then it takes time to analyze and shut down the proper locations.”
There is already speculation that next quarter’s earnings will see growth again due in large part to another successful Prime Day. The unofficial July holiday was Amazon’s “biggest sales day ever,” according to CNBC
. Prime Day saw worldwide orders rising more than 60 percent compared to last year’s event, with US orders alone rising more than 50 percent. Amazon attributes this year’s success to better stock volumes and the fact that it rolled out new discounts as often as every five minutes.
Additionally, Amazon added over 6 million
new Prime members on the day of the event. Though Prime customers make up just 20 percent of their customer base, they account for 60 percent of purchases. In addition, Prime members spend an annual $1,200, meanwhile regular Amazon customers spend an average of $500, partially explaining the success of Prime Day.
Though it’s premature to say whether Amazon will do as well next quarter as it did last week, it is safe to say that Amazon is clearly filling consumer needs across the spectrum and should continue to thrive. We’ll stay tuned for the next earnings report.
To keep up with more retail trends, be sure to follow us on Twitter @BDOConsumer.