Amazon the US-based electronic , commerce, and cloud computing company based in Seattle Washington was founded by Jeff Bezos in July of 1994. He is still Chief Executive Officer of the firm. Amazon is the largest Internet retailer in the world as measured by revenue and market capitalization and is second only to Alibaba Group in terms of its total sales.
Amazon losing money internationally even as its overall earnings soar
Although earning overall continue to exceed expectations, as it expands into areas such as food delivery, grocery chains, and smart home gadgets — but the company is not doing well in international sales where it is facing stiff competition from local companies.
Even though Amazon’s international sales grew 34 percent, it suffered a loss of $622 million in the area. On the other hand, Whole Foods has added to its North American revenue, which rose $30.73 billion. This is a whopping 46 percent increase from last year.
The company also acquired home security company Ring during this quarter. Amazon is expanding into the smart home and appliance market and is providing five different security packages as reported in a recent Digital Journal article.
High growth comes with high spending
Free cash flow has decreased to $7.3 billion from $10.1 billion last year in the same quarter. In its overseas divisions Amazon appears anxious to increase its market even as it fails to turn a profit. The company was more than able to make up the loss through its North American sales and its booming Amazon Web Services (AWS) cloud division.
CEO Jeff Bezos said of the AWS division: “AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down. As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That’s why you’re seeing this remarkable acceleration in AWS growth, now for two quarters in a row. A huge thank you to all our AWS customers, and you can be sure we’ll keep working hard for you.”
Overseas loss increasing
In 2016 Amazon suffered a loss of just $121 million but now it is almost six times that. Blowing through cash to gain markets does not appear to be working, as Amazon goes head to head with local favorites such as Alibaba in China, Rakuten in Japan, Mercado Libre in Latin America, and FlipKart in India. Other U.S. tech companies have nevertheless been successful in international regions. However, overall the situation for Amazon looks bright.
