Amazon toasts record Christmas but sales growth is slowing

Profits rocketed 63% to $3bn, while sales jumped 20% to $72.4bn, in the final three months of 2018. While this performance was better than expected, it was still the slowest rate of sales growth since early 2015.

Across 2018, sales jumped 31% to £232.9bn and profit soared to $10.1bn compared to $3bn in 2017.

In its current quarter, Amazon expects sales to grow between 10% and 18%, slightly below analyst forecasts.

The online giant blamed currency exchange rates. It is also facing challenges due to changing regulations in markets such as India.

Growth drivers

Over the Golden Quarter in North America, sales increased 18% year-on-year, while its international sales – which include the UK – climbed 15%.

Amazon’s profit increase was largely driven by the growth of its high-margin businesses, including its cloud, advertising and third-party seller services.

Amazon Web Services, the online giant’s cloud computing arm, accounted for two-thirds of the firm’s profit last quarter.

Meanwhile, Amazon founder Jeff Bezos pulled out the stellar performance of Alexa.

He said: “Alexa was very busy during her holiday season. Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year.

“The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear.

“In 2018, we improved Alexa’s ability to understand requests and answer questions by more than 20% through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017.”