Late Diwali Season Slows Amazon’s International Sales Growth
Amazon’s sales outside the U.S. slowed in the quarter-ended September as the Diwali festival season kicked off in October this year.
The Seattle-based e-commerce behemoth’s international sales grew 13 percent to $15.5 billion in the third quarter compared with 29 percent in the year-ago period, according to its filings. That was due to a change in the Diwali calendar this year.
“About half of our Diwali sales last year were in Q3. This year, they’ll be fully in Q4,” Brian T. Olsavsky, chief financial officer at Amazon, said during an earnings call on Thursday. It was among the factors that hit the international growth, he said.
The slowdown highlights Amazon’s dependence on the growth in the Indian market. It is aggressively expanding in the country, having pumped in more than $1 billion alone this year in multiple tranches. Besides, it is almost done investing its committed $5 billion in India, and is expected to commit even more as it’s locked in a four-way bruising battle for domination. The biggest challenger being Walmart, which entered India’s e-commerce arena by acquiring a 77 percent stake in Flipkart earlier this year.
Despite the investments, Amazon was able to narrow its losses from the international business. It brought down operating loss to about $385 million from $936 million a year ago and $494 million in the April-June quarter.
There will be no respite in competition with Walmart taking over Flipkart. In the first leg of the Diwali sale, Flipkart accounted for half of the gross sales for the the entire industry, according a report by Redseer Consulting. It estimated the Indian e-commerce industry managed to generate $2.3 billion in sales, adding that Flipkart accounted for 51 percent followed by Amazon at 32 percent.
Amazon said it saw a 60 percent growth in new customers during the first phase of the sale period between October 9 and 14.
It also expects its international sales to receive a boost in the December quarter. “India, although Diwali moved into Q4, (is) going really well. We’ve seen great response from customers,” Olsavsky said. Amazon’s international sales rose 29 percent in the fourth quarter last year. They grew 27 percent in April-June and about 34 percent in January-March.
Overall including the U.S., Amazon’s net sales climbed about 29 percent to $56.6 billion in the third quarter, with the company recording a record profit of $2.9 billion.