Feature
News
1/25/2002
03:41 PM
Connect Directly
RSS
E-Mail
50%
50%
Repost This

Amazon.Com Finally Turns Profitable

Web's largest retailer credits improved logistics for upswing

Amazon.com Inc. lived up to its promise and then some last week, surprising Wall Street with its first-ever profitable quarter. The Web's largest retailer eked out a net profit for the fourth quarter ended Dec. 31 of $5 million, or 1 cent per share. A year ago, Amazon suffered a fourth-quarter loss of $545 million.

The Seattle company also posted a pro forma profit, which it had pledged to do, of $35 million, or 9 cents a share. That compares with a pro forma loss of $90 million, or 25 cents per share, in the same quarter last year.

The "most visible" reason for the turnaround is improved fulfillment processes, Amazon CFO Warren Jenson said during a conference call. Amazon operated two fewer distribution centers last year compared with previous years and employed 4,000 fewer people in its fulfillment centers. Improved self-service tools reduced customer contacts per order by a third; shoppers contacted Amazon about half as many times about the whereabouts of their orders.

Amazon also reduced the amount of inventory that sat in a warehouse by 38% quarter to quarter. "Inventory improvements were driven by better allocating inventory across the network," Jenson says, meaning that there were fewer split shipments, or multiple items shipped in separate boxes from separate facilities.

The profits were driven in part by selling a record $1.12 billion in merchandise last quarter, up 15% from the previous year's fourth quarter. Sales increased partly because Amazon lowered book prices. The company also saw an 81% spike in sales in the United Kingdom, Germany, France, and Japan, which totaled $262.4 million. In an effort to spur more business, Amazon announced indefinite free shipping on orders exceeding $99, with some exclusions.

Comment  | 
Print  | 
More Insights
The Agile Archive
The Agile Archive
When it comes to managing data, donít look at backup and archiving systems as burdens and cost centers. A well-designed archive can enhance data protection and restores, ease search and e-discovery efforts, and save money by intelligently moving data from expensive primary storage systems.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Elite 100 - 2014
Our InformationWeek Elite 100 issue -- our 26th ranking of technology innovators -- shines a spotlight on businesses that are succeeding because of their digital strategies. We take a close at look at the top five companies in this year's ranking and the eight winners of our Business Innovation awards, and offer 20 great ideas that you can use in your company. We also provide a ranked list of our Elite 100 innovators.
Video
Slideshows
Twitter Feed
Audio Interviews
Archived Audio Interviews
GE is a leader in combining connected devices and advanced analytics in pursuit of practical goals like less downtime, lower operating costs, and higher throughput. At GIO Power & Water, CIO Jim Fowler is part of the team exploring how to apply these techniques to some of the world's essential infrastructure, from power plants to water treatment systems. Join us, and bring your questions, as we talk about what's ahead.