Thursday, January 31, 2013

Amazon reports record sales of $21bn

Amazon's popularity with shoppers in Britain surged over the Christmas period, underlining the growing threat the online retailer poses to the UK high street.

Amazon packaging
Amazon was expected by analysts to report global sales of $22.2bn (£14bn) in the last three months of last year Photo: Alamy
The world’s largest online retailer on Tuesday night reported record sales in the final quarter of 2012, as more consumers did their shopping on the internet.
International sales, which includes the UK, jumped 20pc to a record $9.09bn (£5.8bn). That helped drive Amazon's total sales in the quarter to $21.3bn, up 23pc from 2011.
"The market is underestimating the long-term international sales opportunity," said Scott Devitt, an analyst at Morgan Stanley. January has already proved to be one of the most brutal months on record for British retailers, with HMV, DVD rental chain Blockbuster and camera group Jessops all collapsing into administration.
All three traditional brick and mortar retailers could not cope with competition from Amazon, and analysts say their failure will only feed the US company’s growth in Britain.
“The failure of high street players will just drive more people to Amazon,” said Neil Saunders at retail analysis firm Conlumino. “Now that Jessops has gone, if you want a camera, you’re more likely to go to Amazon.”
Amazon, which was founded by Jeff Bezos in 1994 as a bookseller, said that sales of electronic books surged 70pc, while sales of physical books saw their weakest growth in the company's history. "We're now seeing the transistion we've been expecting," Mr Bezos said of the shift in book sales. Morgan Stanley estimates that by 2016 Amazon will have almost a quarter of an global online shopping market that will be worth $1 trillion.
While popular with shoppers, Amazon’s muscle in Britain is controversial due to the relatively small amount of UK corporation tax it pays. The company has paid just £2.3m in corporation tax over the past three years despite making £7.1bn in sales. David Cameron said last week that the public had had enough of companies that sell in the UK but use “ complex tax arrangements abroad to squeeze their tax bill”.

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