Breakdown: What We Learned from Amazon’s Q1 2013 Results

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Amazon released their Q1 results for 2013, and to nobody’s surprise, Amazon keeps selling more and more things. In the first quarter alone, Amazon raked in an impressive $16 billion in revenue, bringing it closer to rivaling Target in yearly sales. Of course, one of the advantages Amazon has is its foray into digital products such as an e-reader, original streaming shows, and a digital publishing company. Because digital items cost less to acquire, profit margins are often times higher than physical products, so we can expect Amazon to continue pushing its digital line in the future.

Amazon’s Chief Financial Officer Tom Szkutak held a conference call with analysts to discuss the stats in the Q1 report. While the call did nothing to dispel rumors around big new products Amazon could potentially be developing such as a Kindle-branded smartphone, one thing is clear: Amazon’s existing line of Kindle and Prime brand products is doing very well.

This is in large part due to Amazon’s sustained growth. In the first quarter of 2013, Amazon is seeing an average of 209 million active users – a 21 percent year-to-year increase. With this increase of users, 58% of revenue is generated in the United States while 42% is collected internationally. The overall growth rate of product sales has reached an impressive 24 percent for the eCommerce web store. CFO Tom Szkutak points out that the marketplace is extremely healthy and that business in the United States is booming. The downside, however, is the sluggish growth rates internationally and overall unit growth only reaching 30 percent.

Amazon’s Strategy Moving Forward

During the conference call between Amazon CFO Tom Szkutak and analysts, three points of interest appeared, giving us a glimpse of Amazon’s strategy moving forward.

  1. Customer service. When most companies would be talking about their products and any upcoming releases that could shape up the marketplace, CFO Tom Szkutak decided to focus on Amazon’s web services and customer service. The company is seeking to improve “operational” and “security” elements to enhance the consumer experience and encourage repeat business.
  2. Amazon Fresh. CFO Tom Szkutak was relatively silent about Amazon Fresh, but did state that the test is going very well in the Seattle area. Could this be going national soon?
  3. Geographical growth. During the call, Szkutak highlighted Washington-state as a place where Amazon might be expanding its operation. Investors should also expect Amazon to grow into even more markets over time.