Amazon Grows Sales 31 Percent in Second Quarter

By Ina Steiner

Amazon grew sales 31% to $30.4 billion in the second quarter of 2016, it announced on Thursday. It also reported a profit, revealing net income of $857 million for the quarter. And based on its report, it's clear third-party sellers remain a key contributor to its success.

During a conference call with Wall Street analysts, Chief Financial Officer Brian Olsavsky and Head of Investor Relations Darin Manney answered questions (quoted below) and revealed the following statistics:

• Worldwide paid unit growth was 28% for the second quarter.
  
• Worldwide seller units represented 49% of paid units.

Amazon is opening 18 Fulfillment Centers in the third quarter, compared to opening 6 in the third quarter of 2015. "This will bring us up to 21 net FCs for the year by the end of Q3. That compares to 10 FCs for the first 3/4's of last year on a net basis."

Amazon's CFO said, "Why are we expanding so much? If you remember back in Q4 and the capacity restraints we had in Q4 primarily due to really strong FBA growth." He revealed some statistics, giving signs of expected growth in the 2nd half of the year in terms of unit sales.

In the second quarter, Amazon saw 28% paid unit growth - but for FBA, it was higher than that.

That compares to last year in Q2 which saw 22% unit growth - and that turned into 26% in Q4 last year.

Amazon executives declined to update customer numbers or reveal how many Prime members it had, including declining to reveal how many new members were added as a result of this year's Prime Day.

The executives said "there's a lot of room in Prime," and said there were "a lot of different flavors of Prime," referring to tailored programs for students; tailored video programs; its new monthly membership option; and plans related to grocery delivery.

"We are aggressively looking for the perfect Prime for everybody."

In a press release announcing earnings, Amazon founder and CEO Jeff Bezos was quoted referencing the importance of India. "It's been a busy few months for Amazon around the world, and particularly in India - where we launched a new AWS Region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies - including original content featuring top Indian creators and talent. The team in India is inventing at a torrid pace, and we're very grateful to our Indian customers for their welcoming response."

Amazon called out the performance of its second annual Prime Day, calling it the biggest day ever for the company. 

"Compared to Prime Day 2015, worldwide orders grew by more than 60%, orders from third-party sellers with Prime Day deals nearly tripled, and Prime members saved over twice as much on deals."

Someone reading the press release who was unfamiliar with the company would be hard-put to determine if Amazon was a retail marketplace, a hardware company, or a Hollywood producer. But among the many shout-outs to its devices and content were some significant factoids about its ecommerce business:

• Amazon Business now serves more than 400,000 businesses and generated more than $1 billion in sales in its first year. Amazon Business has more than 30,000 third-party sellers who fulfill over half of Amazon Business orders.
  
• Amazon Prime Air and the U.K. government announced a partnership to advance the safe use of drones for small parcel delivery, providing Amazon with permission to trial new methods, including beyond line-of-sight operation.

Amazon also mentioned the launch of its Pan-European Fulfillment Program, the launch of AmazonFresh in its first international location (London), its growing selection in Mexico where it launched a year ago, and some milestones in India.

It also called out Amazon Marketplace's inaugural Women's Entrepreneur Conference, which will be held in August in Seattle, stating, "The full-day event will bring together over 300 women entrepreneurs and business owners from around the world to network and learn from experts on how to grow, lead, and scale a business on Amazon."

(SOURCE)

- Great news all around! We're excited to grow along with Amazon. What do you think? 

Why Amazon’s Fulfillment Costs Are Expected to Rise

By Adrian Stevens

Amazon’s fulfillment costs have gone up

Amazon (AMZN) has managed to steadily grow its revenue and margins. However, the company’s fulfillment costs have also grown rapidly. Amazon’s strategic push toward growing its fulfillment capacity is further expected to drive its margins in the coming quarters, with fulfillment costs to rise in tandem with them.

Fulfillment costs are the costs associated with fulfilling orders, including storing products in warehouses and shipping them to customers.

The chart above shows that Amazon’s fulfillment costs have also grown quickly. The year-over-year growth rate of these costs rose from 19% in 1Q15 to 34% in 1Q16.

Why the FBA program is important for Amazon

Fulfillment centers allow sellers to sell their products under the Fulfillment by Amazon (or FBA) program. The company considers FBA to be an important growth driver, as it provides customers with a variety of products to select from. Selection growth makes Amazon’s Prime program more valuable to customers.

Amazon plans to grow its fulfillment capacity before this year’s holiday season in order to better compete with rivals, including eBay (EBAY), Walmart (WMT), and Target (TGT). It has opened new fulfillment centers in a number of US (IVV) states such as California, Texas, New Jersey, and Illinois in the last few months.

(SOURCE)

- What do you think about this? Share your thoughts on the comments!

FBA delivered more than 1bn items last year

In its Summer 2016 Trends Report, Amazon.co.uk has reported that Fulfillment By Amazon (FBA) delivered more than 1bn items to customers worldwide last year.

The report also noted that the number of UK sellers earning over £1m was up by 20%, and the UK marketplace sales to the European Union (EU) had shown a unit growth of 33% from 2015.

The number of UK Pro-Sellers trading abroad registered a 50% year-on-year growth.

How this growth will be affected by the UK’s Brexit vote remains to be seen.

(SOURCE)

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Wow! Those are some exciting numbers! How much did YOU sell through FBA? Share it on the comments!