What were Amazon’s key strategic milestones in 2016? Here are four points that struck us from the retailer’s fourth-quarter figures, released overnight. In them Amazon [IRDX RAMZ], which is the UK’s leading online retailer and an Elite retailer in IRUK Top500 research, reported sales of $43.7bn (£35.0bn) in the three months to December 31. That was up by 22% compared to the previous year. Net income of $749m (£600m) was 55% up on the $482m (£386m) reported last year. Full-year sales were 27% up at $136bn (£109bn), while net income of $2.4bn (£1.9bn) was 300% up from $596m (£478m) last time.
How fast Amazon Prime is expanding
Amazon Prime is a key part of the retailer’s strategy to ensure that its customers keep on coming back. It says that tens of millions joined in the last year alone, paying an annual fee in exchange for a wide range of benefits including free delivery, free film and music streaming. UK members benefited from free Amazon Music Unlimited for the first time in 2016. Meanwhile, the service launched in China, offering free cross-border shipping on international products and free shipping on more than 9m domestic items.
“Our Prime team’s customer obsession kept them busy in 2016,” said Jeff Bezos, Amazon founder and chief executive. “Prime members can now choose from over 50 million items with free two-day shipping — up 73% since 2015. Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery. New benefits were also added to the list, like Prime Reading, Audible Channels for Prime, Twitch Prime and more. And customers noticed — tens of millions of new paid members joined the program in just this past year.”
How much Amazon innovated
From the opening of the Amazon Go store in Seattle to the first Prime Air drone delivery and the Alexa voice service, the retailer has used technology to make huge changes to the way retail happens, from payments to delivery and ordering.
Amazon says in today’s figures that the Amazon Go store is powered by “the same types of technologies as self-driving cars: computer vision, sensor fusion and deep learning”. Meanwhile, developers and service providers are adding their own Alexa Skills to the voice service, and integrating it into products from Ford and Volkswagen cars through to LG fridges and Whirlpool washing machines. Twelve teams are now computing in the first annual Alexa Prize, dedicated to “accelerating the field of conversational artificial intelligence” by building socialbots on Alexa to talk to humans.
Indeed, Amazon is now encouraging start-ups to innovate through the Amazon Launchpad, now operating in the UK, US, China, France and Germany.
How it’s using the Internet of Things
Amazon launched its Dash Button in new markets from the UK to Japan during 2016, enabling Prime members to order “hundreds of prouducts from dozens of popular brands” at the touch of a button. Its associated Dash Replenishment Service enables printers and washing machines to order their own supplies direct.
How successful its move into content production has been
In 2016, Amazon Studios was nominated for seven Academy Awards and 11 Golden Globes for films including Manchester by the Sea and The Salesman – up for an Oscar for best foreign language film, no less. Meanwhile, the first episode of The Grand Tour, the vehicle for Jeremy Clarkson and the former Top Gear team, was its biggest show premiere ever on Prime Video – millions of members streamed it in the UK, US, Germany, Austria and Japan on its opening weekend.
Commenting on Amazon’s figures, Malcolm Pinkerton, vice president of ecommerce at Kantar Retail, said: “The pressure Amazon is exerting on rivals is unlikely to recede. Not content with leading the charge in ecommerce, mcommerce, and now voice commerce, Amazon continues to bundle and execute its proposition in ways almost impossible to replicate. While revenues might well miss estimates again, they’re sure to remain the envy of others.”
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