Amazon Q1 2014: sales up, net income up, operating income down
In terms of sales, Amazon is like the giant chicken heart in Arch Oboler’s old time radio show Lights Out: it just keeps growing, and growing, and… 😉
Amazon reports its first quarter financials for 2014.
You can also go from a link there to hear the conference call…often, the question and answer part is the most interesting, but I have to say, they’ve gotten very good at deflecting questions.
The first, amazing thing, is that the sales are up 23%!
Well, maybe not amazing for Amazon, but for pretty much anybody else? Off the charts!
I’m not super sophisticated on market analysis, but to my eye, the losses didn’t seem as bad.
The net income increased. That’s not as important as the operating income, as I understand it, and the latter did decrease 19%. This time, some of the expenses are obvious…and the launch of the Fire TV, among other things, is building a platform for the future.
In the press release, Jeff Bezos says,
“We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start…”
I’m not sure every investor hears that and thinks, “Oh, goody…” 😉
As a customer, though? Woo-hoo!
I like kinetic (keeping things in motion).
Digital is still in the beginning stages (as Bezos likes to say, it is still day one). I don’t want people to stand still…at least not yet.
Bezos also revealed in the press release that Netflix has signed on to the voice search on the
That’s big news! With voice search available (eventually) for Netflix, Amazon Video, and Hulu+, they are covering the biggies.
In terms of the Fire, they are also making it easy to develop games for it…and maybe we’ll get some book-related apps, too. 🙂
Speaking of books, their highlights doesn’t address much in that area for US consumers. Yes, they acquired comiXology, which is big for comics fans. They mention that they are doing an Amazon Publishing thing in Germany, and mentioned the Kindle Owners’ Lending Library in passing.
Don’t think they’ve given up on that, though. Books are (and I think will continue to be) part of who they are. I’m guessing we will see a new Paperwhite pretty soon, and there are more cool things they can do with e-books.
I think we have to honestly say, though, that if you asked 100 people on the street to define Amazon.com, not very many of them would say “an online bookstore” any more.
It’s more about hardware (phone soon?), consumer products…and groceries.
They just introduced something I find a bit weird:
Prime members can order what would be grocery store items.
That sounds good, right?
Well, what’s a bit baffling at this point is that we could already do that. We get quite a few things like that, especially through Subscribe & Save. Subscribe & Save isn’t part of Prime, but being a Prime member doesn’t stop us from doing it. 😉
When you subscribe, you don’t pay shipping, and you get a discount.
With this new Prime Pantry thing, you fill up a box…and then pay $5.99 on top of your annual $99 fee.
At this point (and I haven’t dug through the items much), I don’t see why I would buy from Amazon Pantry, when I can get them with no shipping cost…oh, and faster if they are Prime, by the way. I can usually get Prime items in two (business) days at no additional cost…this could take four or so.
If we look at Amazon’s three core values, we can look at how they might make this appealing:
- Selection: I think that’s the key. One thing they may be doing here is letting you buy smaller amounts. You may not want to buy ten things of deodorant every six months, when you can buy just one as you need it. They may also start taking things off of Subscribe and Save and Prime generally, making them only available through Prime Pantry (or full price shipping). Prime Pantry might manage to absorb a bunch of those “Add-On” items…it can be annoying to have to get to a certain order total to be able to buy an Add-On item
- Price: we start out with the premise that it is going to cost about $6 more. If they could give us discounts which made it cost more than $6 less, people might do it (but that does require pretty sophisticated thinking). They already have an exclusive coupons section
- Service: that’s where they can make this work, I think. It has to seem a lot easier to get it through Prime Pantry. I’m not quite sure how they can do that yet, but they have to really work on the ease of the interface and search. For example, it could suggest when you might need to re-order something. I see that they do have a “buy from past purchases” section…but it only counts Prime Pantry purchases, so I don’t have anything there yet
The other possibility is that they are going to make it a lot better…that this is just an example of “launch limitations”. They could simply improve Prime Pantry (maybe including fresh foods…as a gateway to getting you on Amazon Fresh, when it gets to your town), or make general Prime/Subscribe & Save worse. I wonder if they would fold Subscribe and Save into Prime Pantry, somehow?
We’ll just have to see what happens…don’t worry, I don’t think alphabet soup will ever be the only “book” Amazon carries. 😉
Overall, it looks like initial Wall Street reaction to this report is pretty good. I think the exclusive HBO deal Amazon just signed really made them a mainstream video player in investors’ eyes, and I think Fire TV is seen as a real possibility to get app income.
Remember, it wasn’t that long ago that people didn’t really expect Amazon to succeed with hardware…they are now leaders in that area, as far as consumers are concerned.
Meanwhile, Apple’s iPad sales are perceived as weakening…
Let me wrap up with this: I’m glad I’m not directly competing with Amazon… 😉
* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. Shop ’til you help!
This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.