Amazon reported a net profit of $513 million for the quarter ended March 31, 2015 (Q1 2016) compared to the net loss of $57 million in the same quarter last year. The company posted net sales of $29.1 billion, an increase of 28% from the net sales of $22.7 billion in the same quarter last year.
Here are a few takeaways from their earnings and call with analysts:
Amazon has rolled out Tatkal to 25 cities in India
Amazon.in has rolled out Amazon Tatkal to 25 cities across India. Tatkal is a studio-on-wheels offering a suite of services to sellers, including registration, imaging and cataloging services, and basic seller training. The feature was launched in February and started in Delhi.
It seems that this will be part of Amazon’s strategy to get more sellers on its platform in the country. It remains to be seen whether Amazon will extend the Global Selling programme to these sellers. Over 6000 sellers from India are selling their ‘Make in India’ products on Amazon’s nine global marketplaces.
“So we’re taking it to the sellers, taking the business to the sellers. We’ve already reached sellers in 25 cities and we’re really helping them expand their business not only within their home region, but throughout the whole country,” CFO Brian Olsavsky told analysts.
Cloudtail to operate in “any regime”
Answering a question on India’s regulatory environment, particularly Cloudtail, Phil Hardin, director of investor relations said that the company is “happy to operate in any regime.” “So frankly, the more clarity, the better,” he added.
The government recently clarified FDI rules for ecommerce companies in India. It added that entity would not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies. Amazon’s biggest seller is Cloudtail, a joint venture setup by Amazon and Infosys co-founder NR Narayana Murthy’s Catamaran Ventures. According to some reports, Cloudtail accounts for 40% of sales on Amazon India.
Investments in India to continue
Olsavsky said that Amazon will be increasing investment in India “on all fronts”. “I had a chance to see firsthand the level of invention going on with both customers and sellers, making deliveries to customers, seeing the I Have Space program we have with merchants. It’s a very exciting time in India and again, the invention is off the charts. We are inventing things in India that do not exist in other parts of the world,” he added.
Amazon added new funds worth Rs 1,980 crore (~ $290 million) into its Indian business unit in February.
Investment in video to ramp up
Amazon seems to be taking on Netflix and the company said it would continue to invest “significantly” for Prime video. “We’re going to significantly increase our spend in that area. Some of that is in Q2, you’ll see that more in the next few quarters. But we think that’s working and look forward to bringing a lot of new content to our Prime subscriber base,”Olsavsky added.
Amazon invested $100 million in producing original content for Prime in Q3 2015.