Amazon.de Revenue Grows 13%, Slower Than Previous Years
As is the case every year, new revenue figures from Amazon are being released once again with the publication of the Form 10-K from the US Securities and Exchange Commission. These not only break down domestic business but also separately list the major foreign branches of the retail giant. This means that the figures for Germany are accessible as well.
In 2014, Amazon.de was able to continue increasing its revenue. It totaled 11.92 billion USD, which corresponds to an increase of about 13 percent compared to 2013 (10.54 billion USD; +21 percent). Thus, the retail giant was able to significantly grow its business in Germany. However, for the first time since 2010, there’s now a hint of a slowdown in growth, as previously the German branch was able to boost sales by over 20 percent annually. In 2012, Amazon.de generated approximately 8.73 billion USD (+21 percent), in 2011 it was 7.23 billion USD (+36 percent), and in 2010 approximately 5.29 billion USD. For better clarity:
- 2010: 5.29 billion USD
- 2011: 7.23 billion; +36 percent
- 2012: 8.73 billion; +21 percent
- 2013: 10.54 billion; +21 percent
- 2014: 11.92 billion; +13 percent
Consistent Growth in the UK, Recovery in Japan
The situation looked slightly better in the UK where Amazon, with total sales of 8.34 billion USD (+14.4 percent), now has its second most important foreign market. In 2013, Amazon managed to generate 7.29 billion USD (+12.5 percent), in 2012 it was 6.48 billion USD (+21 percent), in 2011 5.35 billion USD (+36 percent), and in 2010 the tally showed 3.93 billion USD.
The Japanese branch of Amazon, with 7.91 billion USD (+3.6 percent), now only ranks third in the international business. Nonetheless, the growth in Japan can be considered a success, as in 2013, there was a 2.1 percent decline in sales. However, the growth uptick could also be attributed to exchange rate fluctuations between the dollar and the yen.
The remaining Amazon resellers, which are not listed separately in the report, collectively achieved 5.35 billion USD in sales.
US Business Is Thriving, While Content Stagnates
In the US, Amazon doesn’t have to worry too much about its retail business. On its home turf, it managed to grow significantly once again with a revenue increase of around 25 percent to 55.47 billion USD.
However, the content business (movies, series, eBooks, music, games, apps) might be a cause for concern for the retail company, as it only managed to increase by 7 percent in the US (from 10.81 billion to 11.57 billion). The year before, growth was still programmed at 18 percent. This is problematic because Amazon invested a lot of money in expanding this sector over the past 12 months. Video streaming (as part of Prime) is supposed to play an even bigger role: Amazon has been producing its own series for some time and also wants to enter the film industry.
The situation was even worse on international markets, where growth in the media sector was only about 0.3 percent (2013: +1.4 percent). (When exchange rate fluctuations are factored in, this translates to a 5 percent gain at least.) It should be noted, however, that the investments made will likely pay off in the next 1-2 years. In particular, the expansion of the Prime service in Germany and the successful launch of Fire TV could lead to a growth spurt in 2015.
Growth at All Costs, But at What Cost?
It will certainly be interesting to see how Amazon develops over the coming years, especially since the content business doesn’t seem to be growing as successfully as traditional online retail.
The weak tablet sales at Amazon certainly make things more complicated, with IDC reporting a massive decline of around 66 percent in 2014. Originally, the flat computers were supposed to be the backbone of the company’s media strategy: Reading, watching movies and series, listening to music, gaming, and shopping—all on one device. The devices are designed with this in mind in terms of (very good) hardware and especially with highly customized software. The latter could prove problematic for further progress.
With its first smartphone, Amazon also hit a roadblock: The Fire Phone became a flop and is currently being sold off at deep discounts. Whether another smartphone with a similarly closed interface has better chances in the fiercely competitive mobile market is doubtful. This also applies to the tablets, whose competitors (particularly in the low-price segment) have gained significantly in recent years.
One can only wonder if Amazon will eventually shift its course regarding system openness and better integrate the ecosystem into the regular Android interface, instead of completely redesigning it. The Tolino Tab 8 illustrates how this can be sensibly managed from a customer perspective, with a dedicated home button always leading to the Tolino interface.
In the meantime, Amazon.de continues to support Kindle Paperwhite sales in this country: The eBook reader is available for 99 euros—now with five free eBooks. In view of the previously mentioned expansion of the ecosystem (here: Kindle Unlimited), it will be interesting to see when the eReader will be bundled with the eBook flat rate.
