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Amazon’s Sales Grow, So Do Losses

Investments into tablets, fulfillment centers lead to bigger-than-expected third-quarter loss.

Though Amazon’s net sales grew by double digits during its third quarter, the retail giant posted a significant loss.

On Thursday, Amazon officials reported net sales for the company reached $13.81 billion during the third quarter—a 27-percent increase compared to last year’s third quarter when sales reached $10.88 billion. However, Amazon also posted an operating loss of $28 million and a net loss of $274 million.

Overall, the reported loss was bigger than experts predicted, according to news reports.

Tom Szkutak, the company’s chief financial officer, says the loss was linked to Amazon’s recent investments in its tablets and fulfillment centers, its stake in Living Social and new projects in Asia. Amazon is expected to hire 50,000 seasonal employees at its fulfillment centers throughout the U.S. and 10,00 temporary workers in the U.K. to keep up with the holiday demands.

Jeff Bezos, Amazon’s founder and CEO, didn’t seem to mind the loss.

“Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” he says. “…Our approach is working—the $199 Kindle Fire HD is the No. 1 bestselling product across Amazon worldwide. Incredibly, this is true even as measured by unit sales. The next two bestselling products worldwide are our Kindle Paperwhite and our $69 Kindle. We’re selling more of each of these devices than the No. 4 bestselling product, book three of the ‘Fifty Shades of Grey’ series. And we haven’t even started shipping our best tablet.”

Meanwhile, ChannelAdvisor reports that merchandise from third-party sellers on the Amazon marketplace grew to 41 percent of total units, and about $60 billion in gross merchandise volume. Third-party GMV on Amazon now rivals eBay’s $65 billion marketplace, notes ChannelAdvisor CEO Scot Wingo, writing for the ChannelAdvisor blog.

Amazon officials predict net sales will rise again next quarter by between 16 percent and 31 percent.


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About the author

Olga Munoz
Olga Munoz is editor of TheOnlineSeller.com. In addition to writing news and feature articles about e-commerce, selling trends, online marketing and other topics of interest to online sellers, Olga manages the site's social media efforts. A journalism graduate of Chico State, Olga says her favorite part of being a journalist is learning interesting facts that help put stories into perspective, attending industry events and meeting interesting people "that leave you smiling, even in tough situations." Opinions expressed here may not be shared by The Online Seller and/or its principals.



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