Groceries, fashion rack up sales for Amazon

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Amazon, the online retailer, saw sales of non-media goods more than double during the important fourth quarter of holiday sales, underlining its continuing change into a broadline retailer.

The retailer said sales of non-media items grew 55 per cent during the quarter, against 25 per cent growth in the sales of the books, CDs and DVDs on which it founded its reputation.

Over the past year, Amazon began selling packaged groceries on its US website. In January this year, it launched a separate online store, Endless.com, selling fashion shoes and handbags. Non-media items now make up more than a third of Amazon’s total net sales.

Amazon reported a 34 per cent increase in sales revenue to $3.99bn during the quarter, exceeding its own forecasts.

Operating income increased 20 per cent to $197m, including $8m in foreign exchange gains, a significant improvement on the previous three quarters as Amazon moved to slow its growth of expenditure on technology development. Much of the earlier spending was aimed at developing the company’s Unbox digital video download platform, launched in September last year.

Jeff Bezos, chief executive, said the quarter had seen “accelerating revenue growth and significant sequential improvement in operating leverage”.

He said the company was continuing to get “a larger share of wallet” from its existing customers, which the company attributes to its flat rate and free shipping initiatives.

He also again argued that Amazon should accept lower margins as it moved into new categories to position itself for future benefits. “Today, with some of the new categories, we’re trying to get the scale, and when we get the scale, good things happen,” he said.

Amazon’s shares rose 6 per cent in after-hours trading to $41.

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