Amazon continues to make loads of money, and last holiday quarter was no different. The company’s fourth-quarter earnings exceeded investor expectations with profit of just over $3 billion on sales of $72.4 billion, a 20 percent increase year-over-year revenue. For Amazon, 2018 was a year of immense growth, and the tech giant capped it off with huge sales from Black Friday, Cyber Monday, and general holiday promotions that lasted through December.
Amazon gave scarce details on which products sold the best, but it did say the last three months were the best holiday season for Echo devices it’s ever had, and that its smart doorbell subsidiary Ring also enjoyed its best quarter ever. As per usual, most of the profits came from the North American segment, including the US and Canada, where users generally don’t spring for the big Asian sales event, Singles Day, which falls on November 11th every year. While Singles Day blew it out of the park when it came to analyst expectations, it saw little interest from North America, which was too busy ordering packages from Amazon.
That’s one of Amazon’s biggest potential weaknesses going forward — that one day, US consumers will grow aware of AliExpress, YesStyle, and cheap alternative sites to visit during the holiday sales rush. These sites often feature similar quality goods to Amazon and are priced competitively. (The downside is that they could take a while to ship from Asia.) Amazon anticipates that sales in the next two months will be negatively impacted by foreign exchange rates, in its first-quarter guidance.
Even so, Amazon continues to post huge numbers that dwarf past performance, while its international plans remain inconsistent and slow-growing. At the same time, Amazon’s big profit-driver, its AWS cloud computing division, brought in $2.2 billion in profit, or just under the profit generated by the entire North American retail division — indicating yet again that Amazon’s future lies largely in figuring out how to cut down on its retail overhead while also relying on the cloud and its growing ad business to drive future growth.
Brands are realizing Amazon is the premiere destination for a large chunk of online commerce
Like AWS, Amazon’s ad sales have the potential to continue growing, as advertisers realize the tech giant is the premiere destination for a large chunk of online commerce. Although Amazon doesn’t list ads in its own sales category, and instead lumps the figure in a miscellaneous category with other services, it appears that sales have nearly doubled year over year, to $3.4 billion last quarter.
For now, the e-commerce scene is interestingly siloed between regions. Just as Amazon can’t make a splash internationally (it still reported a $642 million loss on its international business, although that loss is down 43 percent from this time a year ago), Alibaba similarly can’t hit its mark in the US. For growing, hungry companies like Amazon and Alibaba, they’re surely eager to change the status quo and seize market share from regions that the other has already laid claim to. One thing’s for sure: the resulting fight will lead to tons of deals and promotions for consumers wherever they choose to buy.