The e-retailer says 47% of units sold in Q4 were by sellers on its marketplace, and that Prime membership grew 47% in the United States in 2015.

Amazon.com Inc. today reaffirmed its leading position as the top e-retailer in North America, reporting 2015 full-year revenue of $107.01 billion, up 20.2% from $88.99 billion in 2014. Excluding revenue from service sales, such as computing power and commissions paid by Amazon marketplace sellers—revenue streams that are growing rapidly—product sales totaled $79.27 billion, up 13% from $70.08 billion in 2014.

Amazon’s Q4 holiday season performance propelled those full-year figures. The e-retailer reported fourth quarter 2015 revenue of $35.75 billion, with North American sales, excluding Amazon Web Services, increasing by 24.1% and international sales up by 11.9%. The Q4 results are in line with Amazon’s expectations. In its Q3 2015 results, Amazon projected it would generate sales of between $33.50 billion and $36.75 billion during the fourth quarter, a gain of 14%-25% versus Q4 2014.

Amazon says when excluding $1.2 billion in unfavorable impact from foreign exchange rates, net sales increased 26% in Q4. When excluding $5.2 billion in unfavorable impact from foreign exchange rates, net sales increased 26% for the full year. Amazon operates websites in 13 countries outside the United States.

Sellers on Amazon’s marketplace accounted for 47% of units sold during Q4, up four points from Q4 2014. Amazon says 80% of consumers who bought a physical product on Amazon during the holiday season bought from a seller on the Amazon marketplace.

The e-retailer also posted net income of $482 million for the quarter and net income of $596 million for the full year.

advertisement

Amazon says Prime membership rolls grew by 47% in the United States during 2015. Worldwide, Prime membership grew 51%.

For the fourth quarter ended Dec. 31, Amazon reported:

  • Net sales of $35.75 billion, a 21.9% increase from $29.33 billion in the same quarter in 2014. Of that revenue, about $26.62 billion stemmed from merchandise Amazon itself sold to consumers, what the e-retailer terms “net product sales”—up 15.2% year over year. The rest, $9.13 billion, came from commissions from outside merchants that sell on Amazon marketplaces, the Amazon Web Services cloud computing service and other smaller revenue sources. Those “net service sales,” as Amazon calls them, were up 46.5% from last year.
  • North American net sales of $21.50 billion, up 24.1% from $17.33 billion for the fourth quarter of 2014. North America accounted for about 60.2% of sales in the fourth quarter of 2015, inclusive of web services sales, compared with 59.1% in the same period in 2014.
  • International net sales totaling $11.84 billion, up 11.9% from $10.58 billion in 2014. International accounted for about 33.1% of sales in the fourth quarter, inclusive of web services sales, compared with 36.1% in 2014. During the quarter Amazon.in, Amazon’s site serving India, announced it was the most-visited e-commerce site in the country in October, with more than 30 million visitors. “Customers and sellers can count on us to continue innovating and investing heavily in India,” Amazon CEO Jeff Bezos said when announcing the news.
  • Amazon Web Services revenue was $2.41 billion in Q4, up from $1.42 billion a year earlier. AWS sales accounted for 6.7% of Q4 2015 consolidated revenue, versus 4.8% in Q4 2014.
  • Worldwide sales of books, music and videos increased 3.9% to $7.22 billion from $6.95 billion, while electronics and other general merchandise increased 25.1% to $25.82 billion from $20.64 billion in the same period in 2014. Amazon opened its first store—a bookstore—during the quarter, in Seattle. It also operates staffed pickup points on several college campuses.
  • Net income of $482 million compared with net income of $214 million in the same period in 2014, a 125.2% increase.
  • Spending on marketing increased 15.0% to about $1.76 billion from $1.53 billion in the fourth quarter of 2014.
  • Spending on technology and content, including fees for licensing content for its Amazon Video service, increased 35.2% to $3.57 billion from $2.64 billion. During the quarter Amazon announced a licensing deal with CBS to bring make select shows available for streaming in-season on Amazon Video, and greenlighted several new original series. Amazon had 65.2 million video users in the United States in 2015, according to eMarketer Inc. estimates. The research company projects that will increase to 73.2 million by the end of 2016.
  • Spending on fulfillment increased 33.0% to $4.55 billion from $3.42 billion in Q4 2014.
  • General and administrative spending decreased about 11.8% year over year to $390 million from $442 million.

On a call with investors discussing the results, Amazon chief financial officer Brian Olsavsky noted that Amazon’s warehouses were very full during the quarter, thanks to Fulfillment By Amazon growth. About 50% of units sold by marketplace sellers in Q4 were fulfilled by Amazon.

Ben Schachter of Macquarie Research says this contributed to higher-than-expected fulfillment costs. “What is clearly happening is that there is too much demand for Amazon’s products and services, particularly related to Prime customers and FBA sellers,” he writes in a research note. “This is a high-class problem to have, however it is a problem until solved. Fulfillment costs ramped in Q4, with variable costs rising to meet the demand from both constituents.”

advertisement

For the full year 2015, Amazon reported:

  • Net sales of $107.01 billion, a 20.2% increase from $88.99 billion in 2014. Of that revenue, $79.27 billion stemmed from Amazon selling products itself to consumers, and those sales were up 13.1% year over year. The rest, $27.74 billion, came from commissions from outside merchants that sell on Amazon marketplaces, the Amazon Web Services cloud computing service and other smaller revenue sources. Those “net service sales,” as Amazon calls them, were up 46.7% from last year.
  • North American net sales of $63.71 billion, up 25.3% from $50.83 billion in 2014. North America accounted for 59.5% of sales in 2015, compared with 57.1% in 2014.
  • International net sales totaling $35.42 billion, up about 5.7% from $33.51 billion in 2014. International accounted for 33.1% of sales in 2015, compared with 37.7% in 2014. On a call with investors, Amazon chief financial officer Brian Olsavsky said full-year sales were up 18% in Germany, 19% in Japan and 16% in the United Kingdom, excluding the negative impact of foreign exchange rates.
  • Amazon Web Services revenue was $7.88 billion, up from $4.64 billion a year earlier. AWS sales accounted for 7.4% of 2015 consolidated revenue.
  • Worldwide sales of books, music and videos totaled $22.51 billion, the same as in 2014, while electronics and other general merchandise increased 24.2% to $75.60 billion from $60.89 billion in 2014.
  • Net income of $596 million compared with a net loss of $241 million in 2014.
  • Spending on marketing increased 21.2%to $5.25 billion from $4.33 billion in 2014.
  • Spending on technology and content increased 35.1% to $12.54 billion from $9.28 billion.
  • Spending on fulfillment increased 24.5% to $13.41 billion from $10.77 billion in 2014. During 2015 Amazon expanded Prime Now one-hour delivery capabilities from a few New York neighborhoods to 20 U.S. metropolitan areas, four in the United Kingdom and in central Tokyo. At the close of 2015 it was also delivering restaurant food and groceries from local supermarkets in five U.S. markets. (It added a sixth market last week.) “We feel [Prime Now] is the natural evolution of our delivery and we’re happy to invest in that service,” Olsavsky said. “We like what it does for Prime members.”
  • General and administrative spending increased 12.9% year over year to $1.75 billion from $1.55 billion.

On a call with analysts, Olsavsky said Amazon now has 123 fulfillment centers, up 14 from a year ago. And that it has 23 sortation centers in the United States, four more than a year ago. He further noted that the fulfillment cost per unit declined year over year. Commenting on Amazon’s more recent investment in a semi truck fleet and the growing ways Amazon is delivering packages, Olsavsky said Amazon found those investments necessary to manage orders at peak times. “We’ve needed to add more of our own logistics to supplement existing partners. That’s not meant to replace them,” Olsavsky said. “Carriers are just no longer able to handle all our capacity that we need at peak.”

Looking ahead, Amazon said it expects to generate between $26.5 billion and $29.0 billion in Q1 2016, which would be equal to 17% to 28% growth from a year ago. Amazon is the largest e-retailer in North America and Europe, as ranked in Internet Retailer’s Top 500 and Europe 500 research guides.

Favorite

advertisement