Does Amazon intend to make profit an actual goal at some point or just focus on growth forever?
Hello! Thanks for your question: Does Amazon intend to make profit an actual goal at some point or just focus on growth forever? In short, Amazon usually turns a profit and does not plan on slowing growth in the foreseeable future. From their innovations, 2016 was their most profitable year. Below you will find a deep dive of my findings.
To answer your question, I searched the following: Corporate websites, Industry reports, Trusted media sites, User forums and review sites. I focused on Amazon’s company growth and multi-year profitability.
Except for two years, Amazon has reported an annual profit since 2003. The second fiscal quarter of 2016 was the most profitable for Amazon yet. Amazon's profit during this reporting period was up 832% and sales jumped 31 % from the previous year, were Amazon reported only $92M in profit. Amazon's profit for the second 2016 fiscal quarter was $857 million profit from $30.1 billion in revenue. Amazon’s profitability is continually fluctuating, as of the first quarter of 2017, their profits dropped to $724 million. Amazon's North American retail division was at $596M profits in the first quarter of 2017 and their cloud services brought in $890M, however, Amazons International division still had a loss in retail profits totaling $135M, but that was a reduction of 29% of the loss reported in the second 2015 fiscal quarter.
The rise in profit is attributed to their extremely profitable Amazon Web Service, by adding more delivery options for Amazon Prime customers, that reached to 60 million members in the US market for 2016.
AMAZONS PROFITS 2003-2016 :
2003: $35M, 2004: $588M, 2005: $359M, 2006: $190M, 2007: $476M, 2008: $645M, 2009: $902M, 2010: $1,15B, 2011: $631M, 2012: negative $39M, 2013: $274M 2014: negative $241M, 2015: $596M, 2016: $749M
AMAZONS FOCUS ON GROWTH:
Amazons desire to keep growing has entailed the startup of multiple divisions. Amazon now has a cloud computing business, consumer electronics business, a movie studio, an airline, an ocean shipping company, and the list goes on and on.
The expense involved in starting their own airline and ocean shipping division may pay off. Amazon reportedly spent $11.5 billion on shipping in 2015. That is double what they spent in 2013.
Amazons' continued growth approach can be summed up in a quote from Jeff Bezos, the CEO of Amazon, who told shareholders, “experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.”
Amazon does not stick with a one specialty line of thought, regardless of the implications on their own brand. Amazon has had great success with their new Echo smart speaker, however sales of their Fire Phone have greatly declined.
Their latest Amazon Streaming Service has been profitable and was constructed on their already existing music store begun nine years ago. Amazon built their new movie studio upon a crowdsourcing platform introduced in 2010. Amazon is the second-largest seller in the US apparel market. Amazon now sells, perishable foods, diaper, furniture, electronics and accessories, the list is virtually endless.
The CEO, Jeff Bezos emphasizes Amazons platforms to serve its own customers in the best way possible. “Our customers are loyal to us right up until the second somebody offers them a better service,” he says."
In the desire to keep happy customers, Amazon has invested millions in startups to build new voice-control apps for Alexa, the intelligent assistant, giving her a multitude of new skills. They are even experimenting in delivery by autonomous drone, and made their first in the UK.
Bezos’s strategy to continue to evolve has allowed Amazon to experiment. Back when Amazon first started they only sold only books. Today there are an almost unlimited number of storefronts, who can be set up by anyone and sell just about anything.
Most of Amazon’s recent innovations are connected to Prime, which accounts for an estimated 60% of total value sold on the site. Prime customers are estimated at spending around $2,500 with Amazon annually.
The popularity of Prime has not only increased Amazons revenue, it allows them to track customers interest, to help them develop more products, tailored to Prime customers. This can help insure, repeated memberships.
The expansion of Prime services has paid off, with a reported $749M in profits reported by Amazon for 2016. Prime members have a choice of 50 million items and free two-day shipping and some items are delivered in a few hours. That is a 73% increase since 2015. Prime Video is available in over 200 countries. Prime increased the membership benefits with Prime Reading, Twitch Prime, Audible Channels for Prime, and more. Amazon had millions of new Prime members join the program in just this past year.
In conclusion, Amazon has always and will always continue to focus on growth to please its customer base. Their reported profits may not be as high as one would expect for their size, however from their continued expansions, to increase customer satisfaction, their profits have continued to grow. Thanks for using Wonder! Please let us know if we can help with anything else!