As we observed and predicted the upcoming big losses for the Alexa as subsidiary to Amazon together with other losses such as Amazon Echo loss or its failed project of Amazon Echo camera, now it’s time for real numbers as Amazon permanently losses abroad to become an only local company.
Long accused of gaining market share at a loss, Amazon reached a milestone in 2016 towards a sustainable economic model. The online retail giant and IT service provider increased its revenue last year by 27 percent to $ 136 billion. Most importantly, the group founded by Jeff Bezos doubled its operating income to $ 4.2 billion in one year, and quadrupled its net income to $ 2.4 billion. In the end, the ratio of income to sales shows a net profitability of 1.7%, which is still slim, but which is close to the standards of large physical retailers who realize small margins on large volumes.
However, Amazon is not a distributor like the others. Indeed, its most profitable activity is AWS (Amazon Web Services), its IT service business (see below) that releases, it, an operating margin of … 25%, to $ 3.1 billion. Having such an ancillary activity, it helps, even if the growth of its operational result until then exponential (67% still in 2016), slows down because of the intense competition on the cloud. However, is the business of Amazon merchant only a fad funded by IT making unfair competition, because unprofitable, to Walmart and other Carrefour?
Millions of products
It is no longer really possible to say that. In fact, excluding the AWS, Seattle’s North American business, in addition to having climbed nearly 80% in twelve months, posted operating income of $ 2.36 billion. Operating profitability reaching 3%. In its home market (plus Canada) the e-commerce giant is making money. The policy of the offer meets success. The site now offers nothing less than 50 million products. Thanks to third-party merchants who generate roughly half of the activity and pay solid royalties. Amazon also continues to push its edge in customer services. The video service is now available in 200 countries, Prime Now, which offers delivery in an hour or two was launched in 18 new cities in 2016, including Paris. But the figures of the e-tailer who promised Donald Trump to create 100,000 jobs in the United States in the next eighteen months (the group has a total of 341,000 employees) are not yet as good out of his home market.
Its activity outside IT services abroad remains largely in deficit, in terms of operating income. Amazon lost $ 1.28 billion in 2016 outside of North America. And this loss has more than doubled compared to 2015 when it was 500 million. The CFO has pointed out large deficits in India. It prevents. This brings water to the mill of those in France – where according to some estimates the group would achieve $ 3.1 billion in annual turnover – say that Amazon works at a loss. We also see that internationally, the sale of physical products – as opposed to digital editorial products such as video or music – account for only three quarters of the 40 billion turnover.
