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Amazon Holiday Season Sales Turn Out to be its Best Ever
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Amazon.com, Inc. (AMZN - Free Report) generated record sales during this year’s holiday season, primarily led by its devices strategy.
Per the company’s press release “This 2016 holiday was the best-ever season for Amazon with devices including Echo Dot, Fire TV Stick, Fire tablet and Amazon Echo topping the best-sellers list.”
Keeping up to its tradition, the company has come up with a number of figures in its press release. Though there are no specific sales data, some numbers are worth noting.
Prime and Fulfillment by Amazon shipped over 1 billion items worldwide. Prime sales have seen a lift relative to last year’s holiday season (figures not revealed).
More than 72% of Amazon’s customers worldwide shopped through mobiles. Worldwide shopping on the free Amazon mobile app increased 56%.
Though actual figures haven’t been cited, the company has certainly sold thousands of Alexa powered devices worldwide. Morningstar analyst R.J. Hottovy estimated that year to date, the company has sold 4 to 5 millions of these devices. Echo sales ramped up over 9 times compared to last year’s holiday season.
In the U.S., over 200.000 full-time and seasonal employees helped the company handle the rush during the holiday season. As many as 45,000 robots worked in more than 20 fulfillment centers.
While Prime has encouraged more customers to spend on Amazon, Alexa and Dash have made the ordering process smoother.
Our Take
It’s not clear yet where Echo is headed, but Amazon has inked partnerships with several IoT hardware makers to integrate Alexa. The idea is to make Alexa the central point connecting IoT devices used in any household and get unrivaled customer data. This in turn will help the company to have a longer-term competitive edge over Alphabet’s Google Home, Microsoft’s Cortana and Apple’s Siri.
The record Prime sales underscore how efficiently Amazon is using the platform to drive sales. Prime memberships help repeat sales of not just general merchandise but also media (books, music, video, etc). Amazon continues to push advantages exclusively to Prime members thus encouraging them to spend more on Amazon. This in turn lures more users to Prime translating into increased sales for Amazon.
The nature of the retail business does not leave too much room for differentiation, so price competition is intense. However, despite the seasonality in Amazon’s business and the resultant fluctuation in gross margin, operating margins do not fluctuate much.
This is because of a relatively flexible operating cost structure, which allows the company to curtail technology and content expenses when margins are impacted by discounts and promotions during the holiday season.
The company’s revenues get a huge boost from the holiday season each year and this year has been no different. Shares of Amazon have been steadily treading higher on a year-to-date basis. The stock has returned 12.53% compared with the Internet Commerce industry’s gain of 6.37%.
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Amazon Holiday Season Sales Turn Out to be its Best Ever
Amazon.com, Inc. (AMZN - Free Report) generated record sales during this year’s holiday season, primarily led by its devices strategy.
Per the company’s press release “This 2016 holiday was the best-ever season for Amazon with devices including Echo Dot, Fire TV Stick, Fire tablet and Amazon Echo topping the best-sellers list.”
The leader wrestled market share from rivals such as Wal-Mart (WMT - Free Report) , Best Buy (BBY - Free Report) and Apple (AAPL - Free Report) this holiday season.
Keeping up to its tradition, the company has come up with a number of figures in its press release. Though there are no specific sales data, some numbers are worth noting.
Prime and Fulfillment by Amazon shipped over 1 billion items worldwide. Prime sales have seen a lift relative to last year’s holiday season (figures not revealed).
More than 72% of Amazon’s customers worldwide shopped through mobiles. Worldwide shopping on the free Amazon mobile app increased 56%.
Though actual figures haven’t been cited, the company has certainly sold thousands of Alexa powered devices worldwide. Morningstar analyst R.J. Hottovy estimated that year to date, the company has sold 4 to 5 millions of these devices. Echo sales ramped up over 9 times compared to last year’s holiday season.
In the U.S., over 200.000 full-time and seasonal employees helped the company handle the rush during the holiday season. As many as 45,000 robots worked in more than 20 fulfillment centers.
While Prime has encouraged more customers to spend on Amazon, Alexa and Dash have made the ordering process smoother.
Our Take
It’s not clear yet where Echo is headed, but Amazon has inked partnerships with several IoT hardware makers to integrate Alexa. The idea is to make Alexa the central point connecting IoT devices used in any household and get unrivaled customer data. This in turn will help the company to have a longer-term competitive edge over Alphabet’s Google Home, Microsoft’s Cortana and Apple’s Siri.
The record Prime sales underscore how efficiently Amazon is using the platform to drive sales. Prime memberships help repeat sales of not just general merchandise but also media (books, music, video, etc). Amazon continues to push advantages exclusively to Prime members thus encouraging them to spend more on Amazon. This in turn lures more users to Prime translating into increased sales for Amazon.
The nature of the retail business does not leave too much room for differentiation, so price competition is intense. However, despite the seasonality in Amazon’s business and the resultant fluctuation in gross margin, operating margins do not fluctuate much.
This is because of a relatively flexible operating cost structure, which allows the company to curtail technology and content expenses when margins are impacted by discounts and promotions during the holiday season.
AMAZON.COM INC Net Income (TTM)
AMAZON.COM INC Net Income (TTM) | AMAZON.COM INC Quote
The company’s revenues get a huge boost from the holiday season each year and this year has been no different. Shares of Amazon have been steadily treading higher on a year-to-date basis. The stock has returned 12.53% compared with the Internet Commerce industry’s gain of 6.37%.
Zacks Rank
Amazon currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>