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Amazon’s revenues skyrocket amid Alexa rampage

Amazon has exceeded consensus revenue forecasts in its fourth-quarter earnings update, booking a 38 per cent increase in sales to US$60.5 billion for the three months ended December 31.

The figures, which include sales from Whole Foods, show that net income was US$1.9 billion during the fourth quarter and US$3 billion for the full year (up 20 per cent on 2016).

International sales – which include trading in Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, Netherlands, Spain and the UK – grew by 29 per cent to US$18 billion in the fourth quarter and by 18 per cent to US$54 million for the full-year.

Although rising expenses saw the international division book 58 per cent increase in its operating losses to more than US$3 billion.

Overall operating income decreased by 2 per cent to $4.1 billion in 2017.

Revenue in North America increased by 42 per cent to $37 billion in the December quarter and increased by 24 per cent to US$106 billion for the full year.

Growth in Amazon Web Services, which brought in US$5.1 billion in revenue for the year, helped drive a positive story for the ecommerce giant.

Amazon founder and CEO Jeff Bezos said growth in voice-platform Alexa was particularly pleasing.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down,” said Bezos.

“We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers. Much more to come and a huge thank you to our customers and partners.”

Amazon launched Alexa in Australia last month and has already signed up a myriad of local partners, including HOYTS cinemas.

Amazon today said that more than 30,000 ‘skills’ (or functions) are available through Alexa, with notable additions including partnerships with Activision and the NBA. Customers are now able to control more than 4,000 smart home devices from 1,200 unique brands using Alexa.

Locally, voice is shaping up to be a battlefield for eCommerce retailers in 2018, with Amazon alongside other large eCommerce businesses looking to get in on the ground floor of the technology.

Global data managing director Neil Saunders said the result showed that Amazon was a clear winner over the holidays, despite the inclusion of Whole Foods revenue.

“Amazon was one of the clear winners over the holiday season. Admittedly this number is flattered by the inclusion of Whole Foods revenue, but even when this is stripped out, Amazon still increased sales by an impressive 27.9%,” he said.

“Given this is above the trajectory of recent growth, it is safe to say that Amazon shows no signs of slowing down.”

Saunders further noted that Amazon appears to be “nowhere near its potential”, particularly in relation to markets like Australia.

“Although Amazon has grown sharply, it is still nowhere near its potential. There are categories, like home and apparel, where it is underpenetrated and with tweaks to its proposition should be able to make further gains.

“There are markets around the world, like Australia, where Amazon is just getting started and has significant scope to boost sales. There are areas, like healthcare, that it is seeking to disrupt in the future. And there is Whole Foods, where some progress has been made – but which has yet to feel the full force of Amazon’s innovative approach. In other words, Amazon has a lot more runway to grow,” he said.

While a consensus has emerged that Amazon’s Australian launch fell short of expectations last December the ecommerce giant is expected to roll-out its Prime loyalty program and fulfilment by Amazon later this year, which are expected to boost its local sales.

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