SUMMARY
Investments in countries like India, Brazil, the Middle East are right and the businesses in these countries are on right trajectories: Andy Jassy
Amazon reported a lower-than-expected profit of $278 Mn in Q4 for its overall business as against $14.3 Bn in the quarter ended December 2021
Despite the ecommerce giant pumping in billions of dollars in India, Amazon India is saddled with losses
US-based tech giant Amazon said that its business in emerging countries like India, Brazil, and the Middle East would take some time to become profitable, but these markets are on the right trajectories.
“If you look at countries like India and Brazil and the Middle East and Africa and Turkey, Mexico and Australia and a number of those types of countries, we like what we’re seeing. They take a certain amount of time. There’s a certain amount of fixed investment you have to make when you enter a new geography,” Amazon CEO Andy Jassy during the company’s Q4 2022 earnings call’
“…But they’re all on the right trajectory and following trajectories that roughly look like what we saw in North America and our established international geographies, and we think it’s the right investment,” Jassy added.
The statement comes amid a global economic slowdown which has affected big tech companies including Amazon. The impact is visible on their balance sheet as well as the various restructuring efforts being taken by these companies, such as resorting to mass layoffs.
Amazon began job cuts starting November last year, impacting around 10,000 employees across the globe. Its India headcount at that time stood at around 100K. In January this year, Amazon increased the estimate of job cuts to 18,000.
Earlier, Inc42 reported that the layoff exercise at Amazon India will impact the tech, HR and Prime teams.
Despite the cost-cutting measures, Amazon reported a lower-than-expected profit of $278 Mn in Q4 for its overall business as against $14.3 Bn in the quarter ended December last year.
Meanwhile, its net sales increased 9% to $149.2 Bn from $137.4 Bn in Q4 2021.
While the North America business saw a 13% year-on-year (YoY) growth in sales, sales of the international business decreased 8% YoY to $34.5 Bn, including changes in foreign exchange rates.
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon. The vast majority of total market segment share in both global retail and IT still reside in physical stores and on-premises data centres; and as this equation steadily flips, we believe our leading customer experiences in these areas, along with the results of our continued hard work and invention to improve every day, will lead to significant growth in the coming years,” Jassy said in a statement.
Amazon expects its net sales to be between $121 Bn and $126 Bn, or to grow in a range of 4%-8% YoY in Q1 FY23.
In the latest developments in India, Amazon recently invested an additional INR 400 Cr in its Indian logistics arm Amazon Transportation Services, and launched its Prime Gaming subscription in the country. Last month, it also launched its dedicated cargo fleet ‘Amazon Air’ for Prime users in the country for faster deliveries.
However, the company continues to be saddled with losses in the country. Amazon Seller Services, Amazon’s India marketplace business, reported a loss of INR 3,649.2 Cr in FY22, a decline of 23% YoY. Meanwhile, its wholesale arm, Amazon Wholesale, saw its net loss triple to INR 480.3 Cr in FY22 from INR 161.8 Cr in the previous year.
