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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Amazon boss says he 'works hard to charge less' as sales rise but profits fall

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Amazon chief Jeff Bezos said the company he founded would continue to “work hard to charge less” as the online retailer unveiled growing sales but a bottom-line loss.

The company said Kindle models now occupied the top three spots in its worldwide bestseller list, followed by fourth-placed book three of the Fifty Shades of Grey series.

Bezos, Amazon’s chief executive, said: “Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point. And our approach is working.”

His comments came as the online retail giant this week said sales rose 27% to $13.81bn (£8.58bn) in the third quarter of its financial year, to September 30. Sales from its international business, which includes Amazon.co.uk, rose by 20% to $5.92bn (£3.68bn). But the company turned in a net loss of $274m (£170.15m) over the period, compared to net income of $63m (£39.13m) at the same time last year. The figure, said Amazon, was hit both by changes in foreign exchange rates, and by a loss at LivingSocial , in which it holds a stake.

Looking ahead, Amazon predicted fourth quarter net sales of between $20.25bn (£12.58bn) and $22.75bn (£14.13bn), up between 16% and 31% compared to the same time last year. It also anticipates operating income in a range between a loss of $490m (£304.3m) and profit of $310m (£192.5m), compared to $260m (£161.49m) last time.

Our view: Jeff Bezos here sums up the Amazon philosophy, of being the cheapest on the market. It certainly works as an approach to growing sales, as these results show. But most retailers don't have the scale to make this a profitable approach. For the majority, therefore, the onus has rather been on providing great customer service while selling products, preferably exclusive, at a good price.
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