Top 3 Things to Know From Amazon's Annual Report

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Amazon (NASDAQ:AMZN) CEO Jeff Bezos has launched an annual shareholder letter yearly since 1997. Loads has modified up to now 20 years for the corporate that hit $177 billion in income in 2017, up from $148 million in 1997. 

In this yr’s letter, Bezos attributed Amazon’s success partly to buyer’s excessive requirements. As he mentioned, “yesterday’s ‘wow’ quickly becomes today’s ‘ordinary,'” and Amazon should regularly try to please these hungry clients. 

Bezos additionally bought very particular about Amazon’s latest efficiency, giving extra transparency behind its Prime program than ever earlier than. While his six-page letter and the annual report launched alongside it are price a learn of their entireties, listed here are the three most essential takeaways.

A blue Amazon Prime advertisement is seen on an Amazon delivery truck parked in a parking lot

Amazon revealed that it has 100 million Prime members. Image supply: Amazon.

1. Amazon Prime has 100 million members

For the primary time in Amazon Prime’s 13-year historical past, Bezos revealed how many individuals throughout the globe are signed up for the membership program: over 100 million. That’s not an enormous shock based mostly on estimates of Prime hitting 90 million in September, nevertheless it’s good to lastly have a strong quantity confirmed by Amazon. 

The membership program that provides perks like free two-day transport on over 100 million gadgets within the U.S. is proving to be a profitable technique for Amazon. In 2017, Amazon shipped greater than 5 billion gadgets by means of its Prime program, Bezos mentioned. And this system continues to develop, with extra folks signing up for a Prime membership in 2017 than in any earlier yr. 

Amazon’s annual report confirmed that the corporate made a complete of $9.7 billion from subscription providers in 2017, up from $6.four billion in 2016. The determine contains income from different subscription providers, reminiscent of Kindle or Amazon Music, nevertheless it was nonetheless solely about 5.5% of Amazon’s whole income final yr. 

However, the income Amazon will get from the Prime charge has by no means been that essential. Prime members are priceless to Amazon not for the annual or month-to-month charge they pay, however as a result of they spend more cash on the platform than non-members. Amazon’s long-term development is essentially depending on its base of Prime members that often purchase gadgets from its platform, store at Whole Foods, purchase its Alexa merchandise, and use its video platform and music providers. 

2. Amazon’s median pay is a low $28,446

Amazon disclosed that its median employee compensation in 2017 was simply $28,446. This is one other quantity that Amazon revealed for the primary time this week, though it is as a result of a brand new SEC rule now requires all corporations to report the distinction in wage between the CEO and their staff.

The quantity relies on the salaries of Amazon’s 560,000 present full-time and part-time staff, in accordance to Bezos’ letter. However, the low determine nonetheless appears to point out that Amazon is run largely by success middle staff. A present job posting for a part-time Amazon success employee based mostly in Indiana says they will count on to earn $12.75 per hour.  

Meanwhile, Bezos earned $1.68 million in 2017 thanks to a low wage of $81,840 and $1.6 million in safety prices that Amazon paid for him. This previous November, Bezos’ net worth hit $100 billion, so he’s doing simply positive and not using a three-figure wage. 

3. Amazon is profitable in India

Amazon.in launched about 5 years in the past and is already the fastest-growing market in India, Bezos claimed. He cited knowledge from App Annie that mentioned the Amazon.in cellular buying app was essentially the most downloaded app in India within the buying class final yr. However, he didn’t launch any monetary figures behind the operations in India. 

This does not imply that Amazon.in has already dethroned Indian e-commerce large Flipkart; it simply means Amazon is now rising at a sooner tempo than Flipkart. However, Flipkart launched in October 2007, so it had about 5.5 years of peaceable development earlier than Amazon stepped into the nation. Last yr, Flipkart misplaced $1.four billion on $3 billion in income. 

And Flipkart is about to get loads greater thanks to added assist from a big-time Amazon rival: Walmart. After months of speaking, Walmart is lastly nearing a deal to purchase a controlling stake (greater than 51%) in Flipkart as a way to get a head begin in opposition to Amazon in India. The deal may come by the tip of April and would worth Flipkart at round $18 billion, The New York Times reported.

 

India is turning into a hotbed for competitors amongst on-line retailers as a result of the nation’s e-commerce market is predicted to develop to $200 billion by 2026, up 1,200% from $15 billion in 2016, in accordance to Morgan Stanley. Bezos misplaced essentially the most populous nation on this planet, China, to Alibaba, so he is further motivated to lay declare to the second most populous nation, India. It’s nonetheless early sufficient that if he invests sufficient cash and manpower, he may overtake Flipkart. 

Showing traders that Amazon.in is making headway and is on its approach to overtaking Flipkart helps Bezos justify the $5 billion Amazon has dedicated to investing in India. And a possible $200 billion alternative appears properly price that funding. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of administrators. Natalie Walters has no place in any of the shares talked about. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.



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