Sunday 11 December 2016

Blockbuster growth at Amazon driven by global shoppers and cloud computing

Marion Dakers

Published 29/07/2016 | 07:28

Jeff Bezos, chief executive officer of Amazon Photo: Bloomberg
Jeff Bezos, chief executive officer of Amazon Photo: Bloomberg

Amazon has topped forecasts as its burgeoning cloud computing arm added to double-digit retail sales growth over the past quarter.

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The online retailer’s net sales growth accelerated to 31pc in the three months to the end of June, beating forecasts, with a total of $30.4bn helped by a $166m uplift from currency movements.

After several years of heavy spending on the business that left it nursing losses, Amazon delivered quarterly profits of $857m, up from $92m a year ago and taking its running total for the past year to $1.9bn.

Just over half of the group’s sales come from North America, and founder Jeff Bezos drew attention to the firm’s debut in India, where the Amazon Prime yearly subscription service has just launched. “The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response," he said.

Shares in the firm, already near record-breaking highs, were volatile but settled up 2pc in after-hours trading.

As well as growth in its global retail business, the group’s lucrative cloud computing arm, Amazon Web Services, reported a 58pc jump in revenues to $2.89bn, as more companies switched over to its platform.

The company, founded by Bezos as a bookseller in 1994, now employs 268,900 people around the world – a rise of 47pc in the past year alone.

Some of Amazon’s newer ventures are also showing signs of progress. The retailer said Amazon Dash, a new device to enable customers to scan and order products, had added 50 new brands to take the total to 150.   

Earlier this week, the UK Government announced that it was the first to offer Amazon permission to test its drone-delivery service. Amazon Prime Air will be tested in airspace around the firm's research centre in Cambridge and further afield.

Amazon Fresh, the firm’s first foray into grocery shopping, launched in London last month in partnership with Morrisons. 

All of this investment meant operating expenses jumped 30.1pc to $29.1bn, with higher costs in its retail supply chains as well as spending on new films and TV for its media business. 

The firm splashed out $3.8bn on "technology and content" during the quarter, an increase of more than 28pc. 

Telegraph.co.uk

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