Amazon Third-Party Units Grow 60 Percent in First Quarter
By Ina Steiner
Amazon.com grew sales 34% in the first quarter of 2012, and a Wall Street analyst called its gross margin performance the "best in 3 years" after many analysts had expressed discontent in January over margins thanks to investment expenses in the fourth quarter.
Net sales increased 34% to $13.18 billion in the first quarter, compared with $9.86 billion in first quarter 2011. Net income decreased 35% to $130 million in the first quarter. But as the Wall Street Journal wrote, "Investors, who have in the past groused over Amazon's strategy to sacrifice profits for future growth, this time focused on the revenue surge."
Third-party Merchant Sales
Amazon's total worldwide paid units were up 49%. Third-party sales were 39% of total paid units, up from 36% a year ago - Amazon's CFO Tom Szkutak called it "very meaningful." Third party sellers saw a 60% growth in unit sales, which Szkutak said was very strong across international and North America. Worldwide active sellers numbered more than 2 million.
An analyst asked about how much of the 39% growth in third-party units was due to stock outs due to the Thai flood and other such occurrences, and asked whether analysts should expect the percentage to "normalize back down from 39% level back down to the mid 30s."
Szkutak said the most notable factor in terms of making a better experience for sellers is Fulfillment By Amazon. "The stock outs and things are, those will happen from time to time in various categories and I think that's certainly one of the benefits for model of having both first party and third party offerings, but I wouldn't view that as the substantial drive for what's happened in the third party over the last few years, it's other things that we have done to improve our experience with sellers."
Another analyst asked if Amazon would share third-party GMV, to which Szkutak basically said no, and said, "I can't give you the GMV. But in terms of units as it relates to our retail units, it's 39% of total units, so it's meaningful."
First Quarter Highlights
Some of the more interesting facts included in the earnings release and coming out of the post-earnings conference call with analysts follow below:
- North America segment sales were $7.43 billion, up 36% from first quarter 2011.
- Active customer accounts grew to over 173 million, up from over 164 million in the fourth quarter.
- Amazon is investing geographically including in China, which is growing very fast and which Amazon sees as a long term opportunity.
- Most of the increase in head count in the first quarter went to operations and customer service.
- Szkutak said Amazon has announced 13 new fulfillment centers for 2012.
A transcript of the earnings call is available on SeekingAlpha.com (hit the Q&A tab to read analyst questions).
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About the author:
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 firstname.lastname@example.org.
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