In its second-largest acquisition, Amazon buys the company for $970 million.
The retailer's European sales grew an estimated 33% in 2010, says a veteran Amazon watcher.
It’s been 14 years since Amazon.com began selling online in Europe, and these days business is booming in the retailer’s core European markets of the United Kingdom, Germany, France, Italy, Portugal and Spain, says one veteran Amazon analyst.
Europe is now the second biggest market behind North America for Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide, and represents the majority of Amazon’s international sales, says Scot Wingo, CEO of ChannelAdvisor and a longtime Amazon observer and blogger.
Based on an analysis of Amazon’s year-to-date earnings, expected results for the full year and recent monthly visitor traffic from comScore Inc., Wingo estimates:
- European sales for Amazon.com will increase to $12.45 billion in 2010, up 33.3% from an estimated $9.34 billion in 2009. That figure is based on Wingo’s analysis that Europe now represents about 80.8% of Amazon’s estimated 2010 foreign sales of up to $15.41 billion and an estimated 80% of $11.68 billion in overseas sales in 2009.
- In the U.K., Amazon’s single biggest European market, sales could rise year over year 33.2% to an estimated $6.22 billion from $4.67 billion in 2009. Sales in the U.K. now represent about 50% of Amazon’s business base in Europe.
- In Germany, Amazon’s second largest European market, sales could grow 33.2% to an estimated $2.49 billion in 2010, up from an estimated $1.87 billion in 2009. German sales now represent an estimated 20% of Amazon’s European business.
Amazon, which usually reports its annual earnings in late January or early February, doesn’t break out sales for specific countries. Amazon also won’t comment on outside revenue projections, says a company spokeswoman.
But Amazon is growing in Europe because the company has spent years building up individual markets such as the U.K., says Wingo. Amazon, which began selling books online in Great Britain in 1997, also now has a centralized operation in Europe, including nine fulfillment centers in the U.K., France, Germany and Iceland, a customer service center in Germany, and a research and development center in Great Britain. “Europe is a key area of growth,” says Wingo.
Amazon also continues to grow its European base by making key acquisitions and investing in fast-growth companies, says Wingo. In October, Amazon acquired BuyVIP.com, a fashion and lifestyle online buying community with more than 6 million members in Spain, Germany and Italy. The purchase price was not disclosed.
Amazon since 2008 also has held a 40% ownership share in LoveFilm Ltd., a U.K.-based video rental and streaming company with 2009 sales of about $158.8 million. Last week, some press accounts had Amazon looking to acquire the rest of LoveFilm in a deal valued at $312 million. Amazon and LoveFilm say they don’t comment on speculation.
“Amazon is acquiring businesses that help fuel its rapid growth rate internationally, and the U.S. focus on fashion and apparel has extended to Europe as well,” says Wingo.