Amazon Cuts Loss, Fulfillment, Marketing Expenses as Sales Rise
Amazon.com saw its net loss drop from $317.2 million in second-quarter 2000 to $168.4 million in the same period in 2001. At the same time, the Seattle-based online retailer’s revenue rose from $577.9 million to $667.6 million. The quarter ended June 30.
While its revenue rose, Amazon managed to trim its fulfillment costs slightly, from $87.6 million a year ago to $85.6 million. The company did not comment on whether this was the result of operating efficiencies or because it was selling more lighter-to-ship, higher-revenue goods such as electronics, tools and kitchen items. These products made up 15.9% of Amazon’s sales in second quarter 2000, and 16.6% in the quarter just ended.
Amazon also pared back its cost of sales from 76.5% of the revenue generated from sales ($441.8 million), to 73.1% ($487.9 million). In short, it spent comparatively less to sell more.
But the company has also reduced its marketing expenses, which dropped from $42.2 million a year ago to $34.7 million this year. Company officials did not immediately comment on the nature of these cutbacks.
Going forward, Amazon said that it expected third-quarter net sales to be in the $625 million to $675 million range, and that fourth-quarter sales would be between 10% and 20% over fourth-quarter 2000, which would put them around $1.07 billion to $1.17 billion.
One factor that may dampen this rosy outlook is a lack of magic. Amazon will not have the boost it got this year from advanced sales of the latest “Harry Potter” book by J. K. Rowling. In early July 2000 the company shipped more than 400,000 copies of “Harry Potter and the Goblet of Fire,” at just under $16 a copy, for a total of more than $6 million. Third-quarter sales in 2000 amounted to $637.9 million.
