The Breadth and Depth of Amazon’s Expansion

Shopper Trak’s holiday projections peg sales during this season to grow 2.4%, the slowest since 2009. These disconcerting holiday shopping sales forecasts may have dampened e-tailer eBay’s spirits. But it will take more than possible bad news to stop Amazon’s rapid growth. The e-tailer continues to surpass market expectations and remains upbeat about the upcoming holiday season.

Amazon’s Financials

Amazon’s Q3 revenues grew 24% over the year to $17.09 billion, ahead of the Street’s target of $16.7 billion. But Amazon reported a loss for the third consecutive quarter. For Q3, the loss of $0.09 per share was ahead of the Street’s target of $0.11 per share.

By segment, Media revenues grew 9% over the year to $5.03 billion. Revenues from Electronics and General Merchandise grew 29% over the year to $11.05 billion. By region, revenues from North America grew 31% to $10.3 billion. International revenues grew 15% to $6.79 billion.

For the current quarter, Amazon projects revenues of $23.5 billion-$26.5 billion, compared with Street projections of $25.9 billion.

Kindle’s New Offerings

Kindle continues to expand its product range. Last quarter it released Kindle Fire HDX and Kindle Fire HD. The $139 priced Kindle Fire HD is a slimmer, lighter upgrade of Fire that comes with an HD display, an improved processor, and dual speakers with Dolby Digital Plus audio. Fire HDX includes the latest version of Fire OS and new features such as Second Screen, which lets users view media content on TV from where they left it on Fire; X-Ray Music, which displays official lyrics for songs that are being played; Prime Instant Video downloads; and the Mayday button, which lets the user have an instant chat with a tech support representative from Amazon to handle any issues with the device.

Fire OS 3.0, also known as Mojito, include enterprise and productivity features, encryption, secure Wi-Fi, a native VPN client, Kerberos support for Intranet access, integration with leading mobile device management (MDM) solutions, a new email client, built-in OfficeSuite support, and wireless printing capabilities. 

Amazon does not disclose Kindle or Kindle Fire sales. But according to IDC, Kindle’s share within the global tablet market fell during the second quarter this year to 2.3%, compared with 4.4% a year ago. Amazon plans to regain this lost ground through the upgrades. According to research firm Pacific Crest, Amazon sold 11.8 million units last year, but sales are expected to slip to 10.5 million units this year. The researcher estimates that sales will be back up to 11 million by 2014.

For its e-reader, Kindle, Amazon introduced Kindle Paperwhite, a reader that uses new display technology with higher contrast and features such as Page Flip, Goodreads, and Vocabulary Builder, to name a few. As part of its book releases, it introduced Kindle MatchBook, a service that lets customers buy the Kindle editions of print books they have purchased for prices ranging from free to $2.99.

Amazon’s International Expansion

As part of its regional expansion, Amazon launched the Mexico Kindle Store, which will enable Mexican customers have access to more than two million titles, of which more than 70,000 are in Spanish. Amazon will also sell Kindle and Kindle Paperwhite locally in Mexico at Gandhi stores.

In India, Amazon earlier launched the marketplace website Amazon.in. Within the last quarter, it has added to the categories of products offered, and the site now sells Kindle, Consumer Electronics, Mobile Phones & Accessories, Computers & Accessories, Toys, Baby, Personal and Health Care Appliances, Watches, Fashion Jewelry, and Home and Kitchen products. Through the site, Indian consumers can access more than 9 million books, 130,000 products, and 1.9 million e-books.

The market is pleased with Amazon’s performance. The stock touched a 52-week high of $368.40 earlier this week after announcement of the results. It is trading at $358.316 with a market capitalization of $164.08 billion.