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The other lifestyle consumption hit: Amazon keeps showing the light

Image representing Amazon as depicted in Crunc...
Image via CrunchBase

Sales up 39% in Q3 to $7.56 billion where bricks and mortar businesses write down that kind of growth even while they are still $1 billion businesses is no mean feat. All this while only international business is in books and music. While in books it is a 50% market share internationally in an annual $20 bln market, in products it has only started growing now.

Kindle is already selling enough to engender confidence in sales of about $2.8 billion in 2010 and $5.6 billion by 2012 meaning it will more than keep pace with dominating partner, Apple with its iPad. The DVD and movies sales are also strong though competitors Blockbuster folded in the seemingly shrinking $12 bln market. Amazon has not grown at the pace of Netflix in the segment but is a significant player with new download technologies and delivery subscription methodologies available to US players

New found interest in Advertising has already driven Amazon’s profits down the chute with expenses up 40% to $7.29
billion for the quarter

Image representing Zappos as depicted in Crunc...
Image via CrunchBase

and company sticking to guiding a $560 mln profit at the upper end. Even then profits have grown from $199 million in the year ago Q3 to $233 mln this September. But Zappos, Kindle and other Bezos’ showpieces are still the periphery of a successful business model that dominates all matters of commercial trust and faith on the web.

Going Ahead

Holiday season will push sales to more than $13 billion in Q4 while analysts expect $12.3 bln from the retailer. Revenues in North America have been growing faster at 45% to $4 bln in Q3 but the international segment is waiting to explode with the retailer shwing an almost conventional conservatism driven by tax and export regulation of its home country.

State based taxes continue to crop up from time to time to destroy its online growth but are not factored in by any analysts as a significant contributor. EGM revenues ( Electronics / products) grew significantly at 80% to $2.1 bln while media still grew albeit slowly at 16%. The company is focussing on reducing inventory turns by maintaining fresher supplies and managing a dynamic matching of consumer habits and desires with store selection.

Image representing iPad as depicted in CrunchBase
Image via CrunchBase
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This entry was posted on October 22, 2010 by in Amitonomics, Emerging Markets, Private Equity, Retail Lifestyle, US.


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