Amazon.de Revenue Slips 0.9% in 2015 Amid Strong Euro Sales Growth
A few days ago, the news broke in the media that Amazon, despite a record profit of 596 million US dollars, had to endure losses on the stock market. When Amazon announced its growth figures for 2015, it had already stated that its revenue in Germany had increased by 18 percent. As is the case every year, the more detailed figures will now be made public with the release of the US Securities and Exchange Commission’s Form 10-K (2015).
This means that the revenue figures for the German business of the shipping giant for 2015 are now publicly accessible for the first time.
Weak Euro Challenges Amazon
It immediately becomes evident that the Euro’s weakness compared to the US dollar significantly impacted revenue. In 2015, Amazon.de was able to generate “only” 11.816 billion US dollars, which represents a decrease of around 0.9 percent compared to 2014.
- 2010: 5.29 billion US dollars
- 2011: 7.23 billion; +36 percent
- 2012: 8.73 billion; +21 percent
- 2013: 10.54 billion; +21 percent
- 2014: 11.92 billion; +13 percent
- 2015: 11.82 billion; -0.9 percent
However, if these figures are converted into euros based on the average exchange rate for each year, a different picture emerges:
- 2010: 3.99 billion euros
- 2011: 5.19 billion; +30.2 percent
- 2012: 6.79 billion; +30.7 percent
- 2013: 7.94 billion; +16.9 percent
- 2014: 8.98 billion; +13.2 percent
- 2015: 10.65 billion; +18.5 percent
However, it should be noted that these figures are only approximate, as the quarterly fluctuations in revenue are not considered. Nevertheless, it clearly shows that Amazon in Germany was able to maintain strong growth, surpassing that of 2013 and 2014.
Looking back: At the start of 2013, the so-called temporary worker scandal began to unfold. Whether this was the cause of the slowdown in growth from 30.7 percent to 16.9 percent is difficult to determine. However, since 2014 was much quieter in this regard, yet revenue shrank again, I suspect that the scandal’s impact was likely negligible.
In any case, Amazon.de achieved another record revenue in 2015 and also posted the best growth since 2012. However, this puts Amazon’s German business below the international growth rate of the shipping giant, which averaged 21 percent.
In North America, Amazon experienced a 26 percent increase, generating 63.708 billion US dollars. In 2014, it was 50.834 billion US dollars, and in 2013, 41.410 billion US dollars. The business on its home continent continues to perform better than internationally.
Slow Growth in Media Business
However, the content business (movies, series, eBooks, music, games, apps) continued to be sluggish. In North America, growth was 8 percent (2014: 7 percent, 2013: 18 percent), while internationally, adjusted for exchange rate effects, growth was only 4 percent (2014: 2 percent, 2013: 7 percent). The share of different markets is not separately indicated.
It’s also unclear what the revenue shares of the various content types are. It can be assumed, however, that the film and series offerings, due to quite aggressive (Prime) marketing (also in Germany), play a significant role in media growth. Amazon now produces its own series and is also active in the film industry.
Conversely, this could mean that other media areas have not grown as strongly as in the years when the series and film sector of the shipping giant played a smaller role.
The biggest issue with Amazon’s media ventures appears to be the struggling tablet business. In 2015, possibly for this reason, the company changed its strategy and now offers lower-cost tablets instead of expensive high-end devices. The 7-inch Fire tablet sold during the holiday season for only 50 US dollars contributed to record sales. Whether this pricing and strategic shift will positively impact the content business will become apparent at the earliest next year when Amazon releases the figures for 2016.
There’s also a lot of anticipation surrounding the future direction of the tablet and eReader sector this year. In 2015, Amazon updated the Kindle Paperwhite, but unexpectedly not the Voyage. Moreover, the Liquavista acquisition from several years ago has yet to yield any results. In my opinion, this suggests that there is a good chance we’ll see more innovations in 2016.
