Retailers shift their ad spending from TV, radio and print ads to digital ads.
Total sales for the year and Q4 grew 40% and 36%, respectively.
Amazon didn’t just put up strong financials in 2010. In baseball parlance, the world’s biggest online retailer tore the cover off the ball with a big jump in sales and an impressive increase in profits.
Net sales were $34.20 billion, a 39.5% increase from $24.51 billion last year. North American net sales totaled $18.7 billion, up 46.1% from $12.8 billion in 2009. North America accounted for 54.7% of sales in 2010.
What those figures mean is that Amazon almost certainly accounted for more than 10% of online retail sales in North America in 2010. Amazon’s $12.8 billion in 2009 North American sales represented 8.6% of the nearly $149 billion in online retail sales for that year reported by the U.S. Commerce Department and Statistics Canada, a government agency. With U.S. e-retail growth at just over 14% for the first three quarters of 2010, according to the U.S. Commerce Department, North American e-commerce is likely to total about $170 billion for 2010; Amazon’s $18.7 billion in North American sales would exceed 11% of that total. The Commerce Department will release its full-year 2010 estimate Feb. 17.
And Amazon’s remarkable growth in 2010 was not limited to North America. In fact, Amazon's 40% overall revenue growth rate in 2010 was the e-retailer's highest since 2000, company officials say.
For the year ended Dec. 31, Amazon, No. 1 in the Internet Retailer Top 500 Guide, reported:
- International net sales totaled $15.5 billion, up 32.5% from $11.7 billion in 2009. International accounted for 45.3% of sales in 2010.
- Worldwide sales of books, music and videos increased 16.4% to $14.9 billion from $12.8 billion while electronics and other merchandise increased 65.8% to $18.4 billion from $11.1 billion.
- Operating income grew year over year 24.8% to $1.41 billion from $1.13 billion.
- Net income grew year over year 27.5% to $1.15 billion from $902 million
- Spending on marketing increased 47.1% to $1 billion from $680 million in 2009. Marketing expenses accounted for 2.9% of net sales.
- Spending on technology and content increased 41.7% to $1.7 billion from $1.2 billion in 2009. Technology expenses accounted for 5% of net sales.
- Spending on fulfillment increased 45% to $2.9 billion from $2 billion in 2009. Fulfillment expenses accounted for 8.5% of net sales.
- General and administrative spending rose year over year 43.3% to $470 million from $328 million in 2009. General and administrative spending accounted for 1.4% of net sales.
“We had our first $10 billion quarter, and after selling millions of third-generation Kindles with the new Pearl e-ink display during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com,” says Amazon CEO Jeff Bezos. Kindle is Amazon’s electronic book reader.
For the fourth quarter:
- Net sales were $12.95 billion, a 36% increase from $9.52 billion in Q4 2009.
- North American net sales totaled $7.2 billion, up 44% from $5 billion. North America accounted for about 55.6% of sales in 2010.
- International net sales totaled $5.7 billion, up 23.9% from $4.6 billion in Q4 2009. International accounted for about 44% of sales in 2010.
- Worldwide sales of books, music and videos increased 10.6% to $5.2 billion from $4.7 billion while electronics and other merchandise increased 60.9% to $7.4 billion from $4.6 billion.
- Operating income decreased year over year 0.4% to $474 million from $476 million.
- Net income grew year over year 8.3% to $416 million from $384 million in Q4 2009.
- Spending on marketing increased 37.2% to $376 million from $274 million. Marketing expenses accounted for 2.9% of net sales.
- Spending on technology and content increased 48.3% to $519 million from $350 million in Q4 2009. Technology expenses accounted for 4% of net sales.
- Spending on fulfillment increased 45.7% to $1.1 billion from $755 million. Fulfillment expenses accounted for 8.5% of net sales.
- General and administrative spending rose year over year to $143 million from $100 million in the fourth quarter of 2009, an increase of 43%. General and administrative spending accounted for 1.1% of net sales.
Although Amazon continues a policy of not disclosing sales of Kindle and of Kindle-related content, digital readers and electronic books were a big reason Amazon’s top line boomed in the fourth quarter, says Bezos.
“Last July, we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected—and it’s on top of continued growth in paperback sales,” he says.
Amazon expects net sales in the first quarter to range from $9.1 billion to $9.9 billion and operating income to range from $260 million to $385 million.