Amazon announced its holiday quarter earnings, and even though the profit jumped during the year-end holiday shopping season, the share prices sank as it fell short of high expectations. It announced a 22 percent rise year-on-year in its fourth quarter sales, which were at $43.7 billion (roughly Rs. 2,94,481 crores). In its earnings call on Thursday, Amazon confirmed India as a very important market moving forward, and is very “bullish on India in the longer-term.”
Amazon CFO Brian Olsavsky hinted that investments in India, digital content services, and Prime benefits have been the primary factors for the slow growth in overall revenue. The company is overall very bullish on India because of the response from sellers and customers, and will continue to build new functionalities for both. As reported earlier, Amazon has invested heavily in India, cementing its long-term stay in the market.
“We are very encouraged with what we’ve created with customers and sellers alike in India over the last few years. We continue to develop new functionality for that country, whether it’s delivery, whether it’s seller features. We rolled out Prime last summer if you’ll remember, and we recently launched Prime Video there.[..] We don’t expect India to be any different. We will continue to build our business there and continue to do a great job for both customers and sellers. We’re bullish on India longer-term and it’s early. But we like the initial engagement we’re seeing and the response from, again, both customers and sellers,” Olsavsky said in the earnings call.
These comments come in the wake of its recent launch of Prime Video in the country, a service that looks to offer fresh regional and local video content to the masses. Olsavsky also spoke about the expansion of AWS, including in regions like India. When asked about the impact of demonetisation, Amazon’s executives revealed little, with the company’s Director of Investor relations Darin Manney vaguely saying, “nothing particular to call out today on that.”
Amazon announced its arrival in India in June 2013, and invested as much as $2 billion in 2014 to ramp up operations. In 2016, Amazon further invested $3 billion(roughly Rs. 20,026 crores), boosting its committed investment in the country to over $5 billion (roughly Rs. 33,376 crores). Announcing the investment, Amazon Chief Jeff Bezos had said that ‘India was Amazon’s fastest growing region’.
As mentioned, Amazon’s fourth quarter revenue rose to $43.7 billion (roughly Rs. 2,94,481 crores) from $35.7 billion (roughly Rs. 2,40,572 crores) in a similar year-over-year comparison. Net income for the quarter was $749 million (roughly Rs. 5,047 crores), compared with $482 in the same period a year earlier. The big stars for Amazon were its AWS service, and Alexa-powered devices. Alexa-enabled devices were the top-selling products across all categories in the holiday season. Customers purchased and gifted a record-setting number of devices from the Amazon Echo family with sales up over 9x compared to last holiday season.