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Amazon Grows Net Sales 15 Percent in Q4

Amazon grew net sales by 15% to $29.33 billion in the fourth quarter of 2014 compared to the Q4-2013, or 18% excluding the impact of foreign exchange. Net sales were up 22% in North America.

While Amazon experienced a net loss in the third quarter, it showed net income of $214 million in the fourth quarter, but that was down 10% compared to the fourth quarter of 2013. And while Amazon is looking at measures to boost productivity, it plans to spend to support growth of its AWS business and will continue to build out its fulfillment network for its Marketplace business.

A new voice was heard on the company’s post-earnings conference call with analysts on Thursday. Future Chief Financial Officer Brian Olsavsky joined the current CFO Tom Szkutak, who will be retiring in June as previously announced – but Szkutak did most of the talking.

Currently, Amazon reports segment results by geography (North America and International). Szkutak said beginning with the first quarter of 2015, Amazon would add Amazon Web Services (AWS) as a separate segment. That will add greater transparency to the numbers and indicates the significance of the business.

In fact, Szkutak said the AWS business is growing very fast in answer to a question about what investments Amazon would be making in 2015. Amazon will be spending more in cap ex to support AWS, the CFO said. (“Cap ex” is bean-counters’ term for capital expenditures.)

He also said analysts should expect Amazon to add fulfillment capacity as in prior years.

Amazon’s CFO also mentioned several times Amazon’s focus on various productivity measures, and during the earnings call, he and Olsavsky revealed some new statistics:

  • The number of Amazon sellers using Fulfillment by Amazon (FBA) grew by more than 65% year-over-year in 2014.
  • In the fourth quarter, FBA units represented more than 40% of total third-party units.
  • Worldwide paid Prime members increased 53% year-over-year.

Other statistics of interest to sellers included the following:

  • Active customer accounts grew 14% in 2014; Amazon ended Q4 with 270 million active customer accounts compared to 237 million at the end of 2013.
  • Worldwide active seller accounts over 2 million.
  • Seller units as a percentage of total paid units was 43%.
  • Worldwide paid unit growth was 20%.

In an answer to an analyst’s question, Szkutak said Amazon’s new sortation centershelped it get closer to customers, helping with holiday and Sunday deliveries and said Amazon was very pleased with the performance of the sortation centers as well as the global fulfillment team.

And in response to a question about gross margins, he noted that AWS has an impact; he said third-party growth is growing at a faster rate than retail; and Amazon is continuing to lower prices for customers and is working with its partners in the vendor side to support those activities from a pricing standpoint.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.