Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
Profits, however, decreased 73% while spending on technology and fulfillment increased.
The third quarter earnings story for Amazon.com, the biggest online retailer, was a familiar one. Total sales are growing at a blistering rate but net income continues to shrink as the company sinks more money into expansion and new business development.
For the third quarter ended Sept. 30, Amazon, No. 1 in the Internet Retailer Top 500 Guide, reported:
•Total sales increased 43.9% year over year to $10.88 billion from $7.56 billion.
• North American sales increased year over year 43.9% to $5.93 billion from $4.12 billion. North America accounted for 54.5% of sales in Q3 2011.
• International net sales totaled $4.94 billion, up 44.0% from $3.43 billion in the third quarter of 2010.
• International accounted for 45.4% of sales in Q3 2011.
• Worldwide sales of books, music and videos increased 23.9% to $4.15 billion from $3.35 billion while electronics and other merchandise increased 58.9% to $6.31 billion from $3.97 billion.
• Net income decreased year over year 72.7% to $63 million from $231 million.
• Spending on marketing increased 53.5% to $370 million from $241 million in Q3 2010. Marketing expenses accounted for 3.4% of net sales.
• Spending on technology and content increased 74.0% to $769 million from $442 million in the third quarter of 2010. Technology expenses accounted for 7.1% of net sales.
• Spending on fulfillment increased 64.7% to $1.12 billion from $680 million in Q3 2010. Fulfillment expenses accounted for 10.3% of net sales.
• General and administrative spending rose year over year 50.0% to $175 million from $117 million in Q3 2010. General and administrative spending accounted for 1.6% of net sales.
Amazon introduced during the third quarter new electronic reading devices and Kindle Fire, a competitor to Apple’s iPad device.
As usual Amazon didn’t release any Kindle-related figure for its most recent quarter, but did say Kindle continues to be a source of significant new sales. “Sept. 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days—we introduced Kindle Fire for $199, Kindle Touch 3G for $149, Kindle Touch for $99, and our all new Kindle for only $79," says CEO Jeff Bezos. "In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned."
For the first three quarters:
• Net sales were $30.64 billion, a 44.2% increase from $21.25 billion in the first three quarters of 2010.
• North American net sales totaled $16.80 billion, up 46.2% from $11.49 billion. North America accounted for about 54.8% of sales in the first three quarters 2011.
• International net sales totaled $13.84 billion, up 41.8% from $9.76 billion in the first three quarters of 2010. International accounted for about 45.2% of sales in the first three quarters of 2011.
• Worldwide sales of books, music and videos increased about 22% to $11.77 billion from $9.65 billion, while electronics and other merchandise increased 62.2% to $17.79 billion from $10.97 billion.
• Net income decreased year over year about 38.3% to $454 million from $736 million in in the first three quarters of 2010.
• Spending on marketing increased about 57.7% to $1.03 billion from $653 million. Marketing expenses accounted for 3.4% of net sales.
• Spending on technology and content increased about 68.6% to $2.04 billion from $1.21 billion in the first three quarters of 2010. Technology expenses accounted for about 6.7% of net sales.
•Spending on fulfillment increased about 61.7% to $2.91 billion from $1.80 billion. Fulfillment expenses accounted for around 9.5% of net sales.
• General and administrative spending rose year over year to $474 million from $327 million in the first three quarters of 2010, an increase of around 45%. General and administrative spending accounted for about 1.5% of net sales.
Amazon expects net sales in the fourth quarter to range from $16.45 billion to $18.65 billion and operating income to range from $200 million to $250 million.