Amazon will continue to invest and accelerate profitability journey in emerging markets: CFO Brian Olsavsky
Says firm will expand Prime benefits, and will continue to build out the fulfilment and transportation networks to better serve customers
- Oct 27, 2023,
- Updated Oct 27, 2023 3:16 PM IST
US retail giant Amazon’s Chief Financial Officer Brian Olsavsky said the performance trends in emerging markets clearly point towards a path to profitability, and the company will continue investing and accelerating the profitability journey in these markets.
“On the emerging side, over the last six years, we’ve launched 10 new countries. History has shown us that those all take time to grow into profitability. The US took nine years originally. And they’re all on their own journey there with growth and scale and profitability and selection and a number of other variables. Those are all going well as well. We’re going to continue to invest internationally in things like Prime and expanding Prime benefits, and we’re going to continue to build out the fulfilment and transportation networks to better serve customers,” Olsavsky said at the company's quarterly earnings call.
The Seattle-headquartered company achieved profitability in different countries at varying timelines. In the United States, it took seven years to achieve the first quarterly profit after its establishment in 1994, while the first full-year profit came only in 2003. While the precise profitability timeline for other major markets like the United Kingdom, Germany, Canada, and Japan are subject to variation and no official confirmation is available, they likely followed a similar trajectory to the US market.
India has grown to become the biggest and fastest growing overseas market for Amazon after the company made its highly anticipated entry on June 5, 2013.
In the third quarter ended September 30, 2023, Amazon’s revenue from international operations grew 11 per cent year-over-year to $32.1 billion. Amazon's international business encompasses all its marketplaces beyond North America.
Olsavsky said the company international sales were close to breakeven during the quarter, reporting an operating loss of $95 million, compared with $2.5 billion in third quarter 2022.
“This improvement was primarily driven by lowering our cost to serve through higher productivity, decreased inflationary pressures and improvements in leverage across our established and emerging international countries as we continue to focus on customer inputs and improve efficiencies within our operations,” he added.
“I can't say it's permanently we've reached a breakeven threshold for profitability. I think the trend lines are clear, though, and we'll continue to work on accelerating that journey in all countries, especially the emerging ones,” he added.
During the third quarter, Amazon registered overall revenues of $143.1 billion, marking a 13 percent increase from the same period the previous year. The company’s quarterly profits stood at $9.9 billion.
Amazon completed 10 years in India in June. In an interaction with Business Today during the time, Manish Tiwary, Vice President and Country Manager of Amazon India’s consumer business, said that the company is leveraging its global operational expertise to develop a targeted playbook for India. Tiwary said the company recognises the investment-heavy nature of the e-commerce industry in its initial stages, but its ability to apply global learning to the unique dynamics of the country keeps it firmly on track towards profitability.
“Amazon has a lot of experience in e-commerce, has operated in a lot of countries and geographies, we have a playbook on how to drive sustainable growth. E-commerce is investment heavy at the beginning. There have been some ups and downs, but we are pretty much on the journey for achieving profitability per the playbook. We have been very careful about what we do. We always go customer backwards to make sure there is genuine customer delight. So, we are very patient stakeholders,” Tiwary said.
US retail giant Amazon’s Chief Financial Officer Brian Olsavsky said the performance trends in emerging markets clearly point towards a path to profitability, and the company will continue investing and accelerating the profitability journey in these markets.
“On the emerging side, over the last six years, we’ve launched 10 new countries. History has shown us that those all take time to grow into profitability. The US took nine years originally. And they’re all on their own journey there with growth and scale and profitability and selection and a number of other variables. Those are all going well as well. We’re going to continue to invest internationally in things like Prime and expanding Prime benefits, and we’re going to continue to build out the fulfilment and transportation networks to better serve customers,” Olsavsky said at the company's quarterly earnings call.
The Seattle-headquartered company achieved profitability in different countries at varying timelines. In the United States, it took seven years to achieve the first quarterly profit after its establishment in 1994, while the first full-year profit came only in 2003. While the precise profitability timeline for other major markets like the United Kingdom, Germany, Canada, and Japan are subject to variation and no official confirmation is available, they likely followed a similar trajectory to the US market.
India has grown to become the biggest and fastest growing overseas market for Amazon after the company made its highly anticipated entry on June 5, 2013.
In the third quarter ended September 30, 2023, Amazon’s revenue from international operations grew 11 per cent year-over-year to $32.1 billion. Amazon's international business encompasses all its marketplaces beyond North America.
Olsavsky said the company international sales were close to breakeven during the quarter, reporting an operating loss of $95 million, compared with $2.5 billion in third quarter 2022.
“This improvement was primarily driven by lowering our cost to serve through higher productivity, decreased inflationary pressures and improvements in leverage across our established and emerging international countries as we continue to focus on customer inputs and improve efficiencies within our operations,” he added.
“I can't say it's permanently we've reached a breakeven threshold for profitability. I think the trend lines are clear, though, and we'll continue to work on accelerating that journey in all countries, especially the emerging ones,” he added.
During the third quarter, Amazon registered overall revenues of $143.1 billion, marking a 13 percent increase from the same period the previous year. The company’s quarterly profits stood at $9.9 billion.
Amazon completed 10 years in India in June. In an interaction with Business Today during the time, Manish Tiwary, Vice President and Country Manager of Amazon India’s consumer business, said that the company is leveraging its global operational expertise to develop a targeted playbook for India. Tiwary said the company recognises the investment-heavy nature of the e-commerce industry in its initial stages, but its ability to apply global learning to the unique dynamics of the country keeps it firmly on track towards profitability.
“Amazon has a lot of experience in e-commerce, has operated in a lot of countries and geographies, we have a playbook on how to drive sustainable growth. E-commerce is investment heavy at the beginning. There have been some ups and downs, but we are pretty much on the journey for achieving profitability per the playbook. We have been very careful about what we do. We always go customer backwards to make sure there is genuine customer delight. So, we are very patient stakeholders,” Tiwary said.