Amazon.com Inc., No. 1 in the newly released Internet Retailer 2018 Top 1000 rankings, generated $51.04 billion in revenue in Q1 2018, up 42.9% from $35.71 billion a year earlier. Its net income also more than doubled to $1.63 billion from $724 million. Goods sold in Amazon’s marketplace accounted for 52% of units sold, up from 50% in Q1 2017.
In a conference call with investors, Amazon further announced it will raise the price of Amazon Prime to $119 starting May 11 for new members. The price change will go into effect for renewing members June 16. The last time Amazon raised the price of Prime–going from $79 to $99–was in March 2014.
Amazon accounted for 30.7% of Top 1000 online sales in 2017, an increase from 29.8% in 2016, according to the Internet Retailer 2018 Top 1000 Report. And counting the gross merchandise value of sales by outside merchants on the e-retailer’s marketplace Amazon.com accounted for nearly 42% of U.S. online retail sales in 2017.
Excluding revenue from service sales, such as computing power and commissions paid by Amazon marketplace sellers, Amazon’s product sales in the first quarter totaled $31.61 billion, up 33.2% from $23.73 billion a year earlier.
Amazon’s online stores—product and digital sales—contributed $26.94 billion to Q1’s sales, up 18.0% year over year, a deceleration from year-over-year growth of 19.8% in Q4 and 22.2% in Q3. Sales at physical stores—Whole Foods, Amazon Bookstores, etc.—generated $4.26 billion. Third-party seller services (including marketplace commissions) added $9.27 billion in Q1, up 44.0%.
The Q1 results exceeded Amazon’s expectations. In its Q4 2017 results, Amazon projected it would generate sales of between $47.75 billion and $50.75 billion during the first quarter.
Amazon’s Q1 highlights
During the quarter, Amazon announced plans to open an 800,000-square foot fulfillment center in St. Peters, Missouri, near St. Louis. It is the first Amazon fulfillment center in Missouri. The e-retailer also announced the 20 finalists in its search for a second headquarters—a decision is expected later this year. Amazon also began offering Prime Now delivery for groceries from Whole Foods; it is currently available in six metropolitan areas, with more expected soon. Amazon opened its first Amazon Go cashierless store to the public during the quarter. Reports indicate six more Go stores are in the works.
Amazon released its 2017 annual report last week and for the first time revealed a membership figure for its Prime loyalty program. The retailer says it has more than 100 million Prime members around the globe. Prime is the paid program that gives members access to unlimited speedy delivery and a host of other benefits.
Looking into the current quarter, users of Amazon’s voice-based assistant Alexa will soon find her language and thought processes improved. Users
can expect Alexa to better interpret more natural language inquiries and respond accordingly, surfacing answers that may exist in Alexa Skills a consumer may not have enabled, Amazon announced today. Alexa Skills are add-on capabilities developers write for Alexa that consumers enable from the Alexa Skills Store. There are more than 40,000 Skills available.
Alexa will also be able to better tie strings of verbal requests together—what Amazon calls context carryover. For instance, Alexa will be able to address related follow-up queries. “Alexa, how’s the weather in Portland?,” followed by, “How long does it take to get there?” With context carryover, Alexa will be able to understand the second question is asking about Portland.
For the 12 weeks ended March 31, Amazon reported:
- Net sales of $51.04 billion, up 42.9% from $35.71 billion in the same quarter of 2017. Of that revenue, about $31.61 billion stemmed from merchandise Amazon itself sold to consumers, what the e-retailer terms “net product sales”—up 33.2% year over year. The rest, $19.44 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 62.3% from last year.
- North American net sales of $30.73 billion, up 46.4% from $20.99 billion. North America accounted for about 60% of sales, compared with 59% a year earlier.
- International net sales totaling $14.88 billion, up 34.5% from $11.06 billion in 2017. International accounted for about 29% of net sales during the first quarter, compared with about 31% in Q1 2017.
- Amazon Web Services brought in $5.44 billion in revenue, up 48.6% from $3.66 billion a year earlier, accounting for a little more than 10% of net sales.
- Net income of $1.63 billion compared with $724 million in Q1 2017 and $513 million in Q1 2016.
Amazon also released sales and spending data by business segment. For the quarter ended March 31:
- Spending on marketing increased 40.6% to $2.70 billion from $1.92 billion.
- Spending on technology and content, including fees for licensing content for its Amazon Video service, increased 40.5% to $6.76 billion from $4.81 billion.
- Spending on fulfillment increased 65.7% to $7.79 billion from $4.70 billion in Q1 2017.
Looking ahead, Amazon says it expects net sales in Q2 to be in the range of $51.0 billion and $54.0 billion, up 34% to 42% versus Q2 2017.