Retailers shift their ad spending from TV, radio and print ads to digital ads.
The world’s largest online retailer reports a 41% increase in sales in 2011.
Amazon sales mushroom in 2011, but the same can’t be said for profits.
Sales grew 41% last year, but net income plunged nearly 50%.
Amazon.com Inc. achieved another huge lift in sales in 2011, but profits plunged as the world’s biggest online retailer continues to invest heavily in technology and content, primarily for its family of Kindle electronic book readers and Kindle Fire tablets.
For the year ended Dec. 31, Amazon, No. 1 in the Internet Retailer Top 500 Guide, reported:
- Net sales were $48.08 billion, a 40.6% increase from $34.20 billion last year. North American net sales totaled $26.70 billion, up 42.8% from $18.70 billion in 2010. North America accounted for 55.5% of sales in 2011.
- International net sales totaled $21.37 billion, up 38% from $15.49 billion in 2010. International accounted for 44.5% of sales in 2011.
- Worldwide sales of books, music and videos increased 19.4% to $17.78 billion from $14.89 billion while electronics and other merchandise increased 56.4% to $28.71 billion from $18.36 billion.
- Operating income decreased year over year 69.6% to $79 million from $260 million.
- Net income decreased year over year 47.4% to $631 million from $1.2 billion
- Spending on marketing increased 58.3% to $1.63 billion from $1.03 billion in 2010. Marketing expenses accounted for 3.4% of net sales.
- Spending on technology and content increased 70.6% to $2.90 billion from $1.70 billion. Technology expenses accounted for 6% of net sales.
- Spending on fulfillment increased 58.1% to $4.57 billion from $2.89 billion. Fulfillment expenses accounted for 9.5% of net sales.
- General and administrative spending rose year over year 40% to $658 million from $470 million. General and administrative spending accounted for 1.4% of net sales.
“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” CEO Jeff Bezos says. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”
For the fourth quarter:
- Net sales were $17.43 billion, a 34.6% increase from $12.95 billion in Q4 2010.
- North American net sales totaled $9.9 billion, up 37.3% from $7.21 billion. North America accounted for about 56.8% of sales in Q4 2011.
- International net sales totaled $7.53 billion, up 31.2% from $5.74 billion. International accounted for about 43.2% of sales in 2011.
- Worldwide sales of books, music and videos increased 14.7% to $6.01 billion from $5.24 billion while electronics and other merchandise increased 47.6% to $10.91 billion from $7.39 billion.
- Operating income decreased year over year 45.2% to $260 million from $474 million.
- Net income decreased year over year 57.5% to $177 million from $416 million.
- Spending on marketing increased 57.7% to $593 million from $376 million. Marketing expenses accounted for 3.4% of net sales.
- Spending on technology and content increased 66.1% to $862 million from $519 million in Q4 2010. Technology expenses accounted for 5% of net sales.
- Spending on fulfillment increased 52.3% to $1.66 billion from $1.09 million. Fulfillment expenses accounted for 9.5% of net sales.
- General and administrative spending rose year over year to $184 million from $143 million, an increase of 28.7%. General and administrative spending accounted for 1.1% of net sales.
Amazon included plenty of statistics on how well it says its electronic book reader and tablet business development is doing—but no unit sales figures. Over the nine-week holiday period ended Dec. 31 Amazon says Kindle and Kindle Fire sales increased 177% over the previous year.
Amazon will also continue to spend heavily on Kindle and digital content new business development—so much so that that the retailer says it could show a loss in operating income for the first quarter. In Q1 Amazon expects sales to range from $12 billion to $13.4 billion, but its operating income to range from a loss of $200 million to a profit of $100 million.