Amazon.com Inc. got off to a strong start in the first quarter, with sales of $35.71 billion in the period ended March 31, up 22.6% from $29.13 billion a year ago.
Retail sales in North America were slightly stronger, up 23.5% in Q1 to $20.99 billion from $17.00 billion a year ago, the retailer said Thursday in its earnings release. Amazon is No. 1 in the newly released Internet Retailer 2017 Top 1000.
Sales by marketplace sellers accounted for 50% of the units sold on Amazon.com, up from 48% in Q1 2016, the web giant reported. The other 50% of product sales are made by Amazon directly.
Profit surged in the quarter, jumping 41.1% to $724 million from $513 million in the year-ago period.
Amazon highlighted its operations in India, Amazon.in, stating it had increased its Prime selection by 75% since launching the loyalty program nine months ago and increased fulfillment capacity for sellers by 26% in 2017.
Amazon in late summer began offering yearlong Prime memberships for 499 rupees, which is equivalent to about $7.50, but that price was for early registrants; the regular price is 999 rupees, or about $15. The India Prime service allows Indian consumers in more than 100 cities to get unlimited one- and two-day delivery of goods ordered on Amazon.in from merchants that use Amazon’s Fulfillment By Amazon service, whereby marketplace sellers outsource warehousing, fulfillment and delivery tasks to Amazon. Prime is $99 a year in the U.S. and comes with other perks, such as streaming video and music, and photo storage.
Amazon’s competition in India is growing as marketplace eBay Inc. and Indian online marketplace giant Flipkart Internet Private Ltd. announced an alliance earlier this month. EBay will sell its operations in India, eBay.in, to Flipkart in addition to making a $500 million cash investment in Flipkart. The deal, expected to close later this year, will mean that Flipkart acquires all of eBay’s buyers in India.
While the eBay-Flipkart partnership is meant to combat Amazon’s growing dominance in the country, Amazon CEO Jeff Bezos made it clear Thursday that Amazon will continue to invest in its Indian marketplace. In 2016 alone, the e-retailer spent $3 billion there. “It’s still Day 1 for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India,” Bezos said.
For the 12 weeks ended March 31, Amazon reported:
- Net sales of $35.71 billion, a 22.6% increase from $29.13 billion in the same quarter of 2016. Of that revenue, about $23.73 billion stemmed from merchandise Amazon itself sold to consumers, what the e-retailer terms “net product sales”—up 15.3% year over year. The rest, $11.98 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 40.2% from last year.
- North American net sales of $20.99 billion, up 23.5% from $17.00 billion. North America accounted for about 59% of sales, inclusive of web services sales, compared with 58.2%.
- International net sales totaling $11.06 billion, up 15.6% from $9.57 billion in 2016. International accounted for about 31% of net sales during the first quarter, inclusive of web services sales, compared with 32.8% in Q1 2016.
- Net income of $724 million compared with $513 million.
Amazon also released sales and spending data by business segment. For the quarter ended March 31:
- Spending on marketing increased 33.3% to $1.92 billion from about $1.44 billion.
- Spending on technology and content, including fees for licensing content for its Amazon Video service, increased 36.3% to $4.81 billion from $3.53 billion.
- Spending on fulfillment increased 27.4% to $4.70 billion from $3.69 billion in Q1 2016.
Looking ahead, Amazon says it expects net sales in Q2 to fall somewhere in the range of $35.25 billion and $37.75 billion, up 16% to 24% versus Q2 2016.