Amazon eyes digital future

28 July 2011

SEATTLE: Amazon, the online retail giant, is hoping to "plant seeds" for future growth by enhancing its range of services helping consumers make the shift from "physical to digital".

During the last three months, the company saw revenues rise by 51% year on year, to $9.9bn overall.

These figures were achieved despite the fact its quarterly marketing spend stood at just $331m, or 3.3% of sales.

Thomas Szkutak, Amazon's chief financial officer, argued a constant emphasis on the needs of consumers is vital to driving its expansion.

"We believe putting customers first is the only reliable way to create lasting value for shareholders," he said on a conference call with analysts.

To date, Amazon has pursued pioneering policies from free shipping and selling items provided by third-party vendors to developing sophisticated recommendations software and publishing user reviews.

While buyer behaviour and digital technologies are still evolving at an extremely rapid speed, Szkutak suggested certain enduring traits among shoppers should play to Amazon's core strengths.

"We can predict that customers will still want low prices, they'll still want [a] great selection, they'll still want convenience, they'll still want innovative products and services," he said.

"So those are the things that we're going to be continuing to work on and have worked on since our inception."

Equally, however, sales growth for the Kindle, the organisation's ebook reader, accelerated on an annual basis, and more than 950,000 titles are already available for this device.

AT&T is now sponsoring screensavers on the Kindle 3G with Special Offers, the most popular variant of this appliance, and sold at a discounted rate in exchange for viewing ads.

Further initiatives implemented by Amazon in the last few months include the launch of, a daily deals website for high-end apparel, broadening the scale of its portfolio.

Amazon also signed a deal with CBS covering 2,000 shows from the broadcaster's back catalogue, meaning over 8,000 movies and programmes can currently be streamed through the Amazon Prime video platform.

The Cloud Drive remote storage tool and Cloud Player music service have seen parallel improvements, as Amazon anticipates rising demand for these capabilities among consumers.

"There's another set of investments certainly you're seeing," said Szkutak. "We're investing in the conversion from physical to digital. We think we have good assets to do that."

"We're very focused on the customer experience. And that comes in a number of different forms. We feel very good about those investments in terms of the traction that we're getting from a customer standpoint."

"We are also planting new seeds today."

Indeed, Szkutak reported many people utilising tools like Amazon Prime are not always using it as a substitute for other purchases.

"We think that our good customers like both. They're both physical and digital customers," he said.

International expansion is also a key target area for Amazon, with China one particular market attracting its attention.

"We're very pleased with our business in China," Szkutak said. "It's growing very fast."

"We are in investment mode in that country … but we think it's a very interesting long-term opportunity and the team's doing a very nice job there."

Data sourced from Seeking Alpha; additional content by Warc staff