Amazon posts record profits after holiday season boom

05/02/2018

Amazon saw sales jump by nearly a third last year, helped by growth in its Prime delivery service.

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Full-year revenue came in at $177.9bn (£124.6bn), a rise of 31%, while profit hit $3bn, against $2.4bn in 2016.

The company reported record sales in the final three months of the year, driven by a surge in online shopping over the holiday season and demand for its cloud services.

The company said more than five billion items were sent using its Prime shipping service worldwide in 2017.

The online retailer added that it had pulled in nearly $2bn (£1.4bn) in the last quarter of 2017, capitalising on robust holiday sales.

Record profits for Amazon added billions to CEO Jeff Bezos’ world-leading worth.

Already ranked as the world’s richest man, surpassing Microsoft founder Bill Gates as his net worth surged to an estimated $105bn (£73bn) earlier this month, Bezos saw his fortune increase further as Amazon reported its largest-ever profits.

The Seattle-based company posted revenue of $60.5bn (£42.4bn) and earnings of $3.75 (£2.6) per share, helping it to eclipse estimates for its fourth quarter figures.

That was up from $43.7bn (£30.6bn) revenue in the final quarter of 2016.

In a statement, Bezos trumpeted the popularity of Amazon’s voice-activated personal assistant technology Alexa.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them,” he said. “We don’t see positive surprises of this magnitude very often — expect us to double down”.

In addition to pinning hopes on Alexa, Amazon has invested heavily in its cloud computing arm. That yielded strong results, with Amazon Web Service seeing its sales grow to $5.1bn (£3.6bn), a gain of 44 per cent compared the fourth quarter of 2016.

Analysis

Anil Gandharve, Global Head of Retail, CPG and Manufacturing at Mindtree, said: “Amazon provides a clear example of how technology can be implemented to create the ultimate personalised customer experience, which has led to a notable increase in its sales.

“From Alexa to the first check-out free supermarket to its Prime shipping service, Amazon exemplifies how the deployment of emerging technologies has enabled them to keep their customers engaged throughout the shopper journey.

“To stay ahead of the competition –as Amazon has – retailers need to use data-driven insights to understand market trends and the purchasing decisions of their customers. Not only this but creating the perfect balance between technology and the human touch, to give customers a tailored experience, will be the key to success.”

Ian Currie, ‎Director, EMEA Sales & Business Development at Dell Boomi highlighted the relationship between a first-class user experience and customer loyalty at Amazon.

“This Amazon sales surge showcases just another example of the undeniably positive relationship between providing a first-class customer service and improved customer loyalty,” Currie said. “In today’s digital era, consumers want access to products and services quicker than ever before, and Amazon has harnessed technology to make this happen.

“While Amazon’s results are evidence that championing a first-class user experience typically results in increased revenues, many companies aren’t tackling the inefficiencies and the challenge of inadequate legacy systems, in their IT ecosystems. Ensuring that applications, data and systems – whether they’re hosted on-premise or in the cloud – are integrated and enabled to communicate with each other in real-time is critical to building the connected business.”

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