Amazon Profits, virtual mannequins. Middle East expansion and new FBA fees

Amazon profits from the Christmas sales period 2018

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Amazon reported this week a profit of $3.03bn, or $6.04 a share, up from $1.86bn, or $3.75 a share, on the same quarter a year earlier. Revenue grew 20% to $72.38bn.This was the third record profit in a row, capitalizing on a strong Christmas retail season and its growing, high-margin businesses such as cloud computing and advertising.

Their profits were boosted by the performance of their voice-controlled virtual assistant Alexa, and the devices which play it. 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. Most importantly for investors, Amazon’s cloud-computing division said revenue jumped 45% in the fourth quarter, cementing its lead over Google and Microsoft. The division has been growing at 40% per annum and is a high margin business compared to retail. The cloud business has become crucial to the success of its parent, not only for revenue but also for profits.

Virtual Mannequins app

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Amazon is making an app to let people try clothes with a virtual dummy. It will scour a user’s selfies to suggest suitable new outfits then depict the person as a mannequin wearing them. The app will also analyse saved snaps and diaries to deduce a user’s job, climate, hobbies and meetings. For example, if a calendar event was entitled ‘Business meeting with James.’ images of professional wear may be selected. If entitled ‘Dancing with friends,’ leisure or clubwear may get preference. To show their preference, users would swipe to like or dislike options. They would also have alternatives such as 'Find more like this' and 'Randomise,'  and be able to share pictures online. 

Middle East Marketplace to open

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Amazon has been reaching out in recent weeks to large multi-national vendors, informing them of an upcoming opportunity to reach consumers, first in the United Arab Emirates and then in Saudi Arabia.
Amazon is downplaying Souq.com, the Dubai-based online retailer it bought for $580 million in 2017 — its priciest international acquisition. The company is telling vendors not to sign up to sell on Souq because it plans to have all that inventory on Amazon’s own site. It is expected that Amazon will introduce all the normal marketplace functionality in the Middle East. Fulfillment by Amazon will be key to attract merchants from the US and Europe to sell in the region and doubtless Amazon Prime will soon follow. Tech and Beauty will be top target categories of interest to merchants. One bonus is that most business in the Middle East is carried out in English, so translation could be minimal.

A Middle East marketplace would be Amazon’s 18th regional or country site following the launch of Amazon Turkey in September 2018.

Amazon changes FBA fees

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Fulfillment by Amazon (FBA) fees across the United Kingdom, Germany, France, Italy, and Spain are being adjusted in 2019 to reflect changing costs of fulfillment, storage, transportation and customer service. While some fees will increase, Amazon's continued investment in supply chain innovations has allowed them to reduce certain fulfillment and monthly storage fees. The changes are good news for sellers with smaller size items (especially apparel and accessories) and will disadvantage some sellers in higher weight tiers.

They have also eliminated long-term storage fees on inventory that has been in a fulfillment centre for 181 to 365 days. The changes will take effect on the 1st of April 2019 and the Multi-Channel Fulfilment fee changes will take effect on the 1st of June 2019.