No one is questioning Amazon’s dominance this Holiday season, as it made record breaking sales. According to the New York Times, Amazon ploughed through 2015 with astounding sales figures. Here are some of the estimates:
- Approximately 51 cents of every dollar spent online went to Amazon.
- Of the $94 billion in industry growth, Amazon took in $22 billion, almost one quarter of the total.
- Amazon shipped 200 million more items through its Prime subscription service this Holiday season (11/1-12/19) compared to last year’s Holiday shopping season.
- 4% of all retail purchases made this year occur through Amazon (this is an estimate only).
But don’t let Amazon’s rising share price fool you. Gaining a mass amount of market share comes at a cost. In this case, the company is not actually profiting a lot. “The company earned just $79 million on $24.5 billion in total revenue in the quarter,” according to the article.
Its web services business is the “Star” from a profitability standpoint and that is likely helping fuel its cash cow i.e. Retail. Certainly its strategy of providing excellent pricing (often ‘heavy discounting’) and an ever improving service and delivery distribution system is providing mass appeal.
In the long run, how will Amazon remain profitable or increase their profits? Will its “Prime” service be enough? Will tapping new market segments be enough to create new momentum well into the future?
We will just have to wait and see what they innovate next.
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