Last year ended on a strong point for Amazon, as it announced a sales increase of 38% to $60.5 billion for Q4 of 2017.
With net sales increasing 31% to $177.9 billion, compared with $136.0 billion in 2016, the company also marked 2017 with investment in a new 60,000 sq ft development centre in Cambridge, which will be home to over 400 machine learning scientists, knowledge engineers, data scientists, mathematical modellers, speech scientists and software engineers.
They will work on projects including Echo, Alexa and Prime Air, Amazon’s future delivery system to get packages to customers in 30 minutes or less.
The company also announced new features for Amazon Business to better service businesses of all sizes, including payment by invoice, VAT exclusive pricing and invoicing, now serving more than 90,000 business customers.
Neil Saunders, managing director of GlobalData Retail, said that with 38.2% sales growth in the final quarter, Amazon was one of the clear winners over the holiday season.
“Admittedly this number is flattered by the inclusion of Whole Foods revenue, but even when this is stripped out, Amazon still increased sales by an impressive 27.9%,” he said. “Given this is above the trajectory of recent growth, it is safe to say that Amazon shows no signs of slowing down.
“Excluding the impact of Whole Foods, product sales grew by 20.2% overall. While this is impressive and indicates Amazon is gaining market share across many categories, it also underlines the fact that Amazon's primary growth opportunities now lie in services. Prime and subscription revenue, for example, increased by 46% over the prior year. This is an impressive uplift and demonstrates Amazon is pulling more and more consumers into its ecosystem of content and services.”
In terms of growth from services, Saunders said that as well as the addition of Whole Foods, which is helping to strengthen Amazon's bottom line, net income increased by 147.8% while operating profit rose by ‘a very respectable’ 69.5%.
“This is in spite of increased investment and higher losses from the international operation. Notably, the better profit outcome also masks the pressure on margins from increased delivery and fulfillment costs: these rose by 56.9% over the prior year and as a proportion of product sales rose to 21.7% from 18.7% in the same period last year.”
