Amazon Striving for Ever-Faster Delivery of Kindle and Other Goods

According to a recently released report on Global Online Retail, excluding travel, the global online retail sector reported saw revenues grow at an annual rate of 15.4% to $530.2 billion from 2007 through 2011. Growth in retail sales were driven by sales of electronics, which grew to $119.2 billion and amounted to 23% of the retail sector’s revenues. The researcher expects the online retail sector to be worth $1,096 billion by 2016, reporting an annualized growth of 15.6% over 2011-2016.

Amazon’s Financials
Amazon’s (NASDAQ:AMZN) Q3 revenues grew 27% over the year to $13.81 billion, shy of the Street’s target of $13.9 billion. However, increasing operating expenses continued to push net income down. Quarterly net income fell from $0.14 a year ago to $0.23 and missed the Street’s target of a loss of $0.08 per share. This was the first time in the past nine years that Amazon reported a quarterly loss.

By region, sales from North America grew 33% in the quarter, while international sales grew 20%. By segment, worldwide media sales grew 11% and worldwide electronics and general merchandise sales increased 36% over the year.

For the current quarter, Amazon projected revenues of $20.25 billion-$22.75 billion, compared with the Street’s forecast of $22.8 billion.

Amazon Continues to Invest in Delivery Centers
Amazon attributed its increased losses during the quarter to continued investments in the opening of new fulfillment centers. Despite the losses, Amazon is not slowing down on this path. Amazon is leveraging its multiple delivery center locations to be able to offer delivery of goods within a few hours of sales. They are planning to invest of $1 billion in opening centers in Florida, Jersey, Virginia, Texas, Tennessee, and California.

International Expansion Planned
Besides domestic markets, Amazon is also targeting international growth. During the past quarter, it launched amazon.co.jp, the Japanese Kindle Store. Apart from being able to purchase from their collection of over a million digital books, Japanese consumers will also be able to select books from a library of 50,000 Japanese-language books. Amazon also entered into an agreement with Japanese mobile services provider, NTT DoCoMo, to enable free 3G wireless access to Kindle 3G Paperwhite users.

Amazon also released its Cloud Player in Europe in the U.K., Germany, France, Italy, and Spain. Amazon Cloud Player is a cloud-based storage service for music files. The player lets consumers store up to 250 tracks free and up to 250,000 tracks for a price of £21.99 (~$35.40) a year. Consumers can access this digital music account from any device using Cloud Player.

Kindle Fire Remains Strong
Amazon has remained silent on the number of Kindles sold during the quarter. Analysts may have been concerned about Kindle Fire sales being pushed down due to the launch of iPad Mini, but Amazon’s management is not worried. According to Amazon’s management, during the past week, Kindle Fire HD’s recorded its biggest day of sales since launch, despite the launch of iPad Mini.

Analysts believe that Kindle Fire may be able to sustain the iPad battle due to its competitive price tag. The iPad Mini is priced at $329, compared with Kindle Fire’s $199 price tag. In addition, Fire comes with a smaller screen of 7 inches and offers an HD display compared with Mini’s 7.9-inch standard display screen.

Amazon’s stock is trading at $237.71, with a market capitalization of $107.68 billion. It touched an all-time high of $264.11 last month.