Free shipping offers are proving to be the keys to success at Seattle-based online retailer Amazon.com, which reported 28 percent sales growth in the fourth quarter and said its free Super Saver shipping offer on orders over $26 will continue year-round.
Amazon said net sales were a record $1.43 billion in the fourth quarter, compared with $1.12 billion in the fourth quarter 2001. And for only the second time in its history, the company reported real (GAAP) profits.
Net income on a GAAP basis was $3 million, or one cent per share, in the fourth quarter, compared with $5 million in the fourth quarter 2001, or once cent per share. The net loss for all of 2002 was $149 million, or 39 cents per share, compared with $567 million, or $1.56 per share, in 2001.
It’s clear that free shipping is something that resonates with consumers, and it’s equally clear that Amazon is listening.
“On top of the five price cuts we’ve made over the past 18 months, we’re announcing today that we’ve decided to make Free Super Saver Shipping on orders over $25 a full-time, year-round offer,” said Jeff Bezos, Amazon.com founder and CEO.
He said the company is now at what he called “a tipping point.”
“Customers are now shopping at Amazon.com as much for our lower prices as for our selection and convenience,” he said.
Looking forward, Amazon said that it expects first quarter net sales to be between $1.03 billion and $1.08 billion, or grow between 21 and 27 percent over first-quarter sales last year.
For all of 2003, the company said it expects net sales to grow more than15 percent. Pro forma net profit is expected to be over $115 million, or better than 27 cents a share.
Wall Street analysts on average had been expecting the retailer to increase sales by 13 percent in 2003 to $4.4 billion.
Amazon had said earlier that more than 56 million items were ordered through its sites worldwide from Nov. 1 to Dec. 23, 2002 — its eighth holiday selling season.
Interestingly, Amazon said that its new apparel store is the company’s fastest-growing store in terms of units sold in the first 60 days since it opened last November. Also, third-party seller transactions on Amazon’s Web sites (new, used and refurbished items sold on Amazon.com product detail pages by other businesses and individuals) grew to 21 percent of worldwide units in the fourth quarter, compared with 16 percent of units a year ago.
Amazon reported record third-quarter revenues of $851 million. The GAAP net loss for the third quarter was $35 million, or 9 cents per share during the quarter, compared with a loss of $170 million, or 46 cents per share, a year earlier.
