- 16th April 2018
- Posted by: Manolis
Amazon released its Q1 2017 results on Thursday, revealing another strong quarter of revenue growth. Net sales rose 23% year-over-year (YoY) in the period, while retail subscription services — which includes Prime fees along with audio, video, and other subscriptions — increased 49% YoY to $1.9 billion. In Q2 2017, Amazon expects sales to grow 16-24% YoY to between $35 billion and $37 billion.
Amazon also highlighted some of its progress in international expansion:
- Amazon’s marketplace in India is one of the fastest-growing in the country. It’s one of the most visited sites, and its app engagement — a key metric as mobile devices are the primary channel for online purchasing in India — grew 46% YoY in Q1. Amazon expanded its fulfillment capacity in India by 26% during the quarter, and its product offerings are up 75% since its launch in August 2016.
- The e-commerce giant launched Prime in Mexico in March, providing free one-day shipping in four of the largest cities in the country, and free two-day shipping to the rest. Amazon plans to use its existing US distribution centers to fulfill Prime orders in Mexico, allowing it to avoid building out a logistics network locally.
- Amazon intends to acquire Souq.com, a major e-commerce player in the Middle East. Amazon cited Souq’s shipping capabilities and presence in multiple countries in the region as advantages to entering the Middle East via its acquisition, rather than building the business from scratch as it’s doing in India and Mexico.
Amazon sees its Fulfillment By Amazon (FBA) service as a major component to its success in foreign markets. The company has seen strong global growth in its fulfillment service for sellers — 40% YoY in 2016 — indicating that FBA may be a critical advantage to draw sellers to its marketplace. This may be especially true in countries with less-developed infrastructure, such as India and Mexico. If Amazon establishes a reputation for fast and reliable delivery in these regions, it may easily become a market leader.
Amazon Prime is reaching saturation in the US, as approximately 65% of US households have Prime memberships, according to BI Intelligence estimates based on data from CIRP and the US Census Bureau. Although there is still room for Amazon to expand Prime in its domestic market, growth is likely to slow significantly as more of the population joins the membership program. In contrast, Amazon has only recently made headway internationally, so there is huge potential to expand Prime in other markets.