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Amazon sales growth slows in Q3 despite rising profits

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Amazon’s profits rose in its third quarter, although it saw its share price dip slightly after it missed analyst expectations for sales.

The ecommerce giant achieved a net income of $2.9 billion (£2.26 bn) compared to £200 million the previous year.

However, while net sales increased 29% to £44.1 billion, this compared to growth of 34% the year before. Sales in the company’s core online business grew 11% year on year, compared to 22% in Q3 2017 and 12% in Q2 2018.

Sales growth was fastest in North America, Amazon’s largest market, where sales rose 35% to £26.75 billion, the same growth figure as last year.

However, in the company’s international arm sales rose 13% to £12.09 billion, compared to 29 percent growth in the equivalent period of 2017.

At the time of writing, Amazon’s share price was down 7% in after-hours trading.

The company saw its operating expenses up 22% to £41.24 billion in the quarter, mainly driven by the rising cost of sales and fulfilment, up 20% and 29% respectively.

CEO Jeff Bezos chose to highlight the growth at the company’s B2B arm Amazon Business, which has now reached £7.8 billion in its annual sales run rate. 

Amazon Business is the firm’s dedicated eCommerce website for business products. Alongside the US and UK, where it launched in 2015 and 2017 respectively, it also operates in Germany, France, Japan and India. It opened in Italy and Spain in the second quarter of 2018. The portal aims to bring a consumer-style experience to the business market, furthering Amazon’s stated mission of being “Earth’s most customer-centric company”.

The results showed Amazon’s physical store sales had reached £3.31 billion come as Amazon is ramping up the services offered from its Whole Food Market stores in the US. The quarter also saw the company open five new Amazon Go stories in Seattle, Chicago and San Francisco. It also launched Amazon 4-star in New York City, which features curated products from the site.

Image credit: Amazon

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