Amazon Marketplace Hits New Records On Sales And Continues Expansion

E-commerce titan Amazon.com, Inc. (NASDAQ:AMZN) broke fresh records in 2013 in its marketplace for small sellers, as more businesses bought into Amazon logistics services and shipped goods worth tens of billions.

The Seattle-based company said Thursday that its more than 2 million marketplace sellers sold more than a billion units globally, and that the number of businesses using Amazon fulfillment – its warehousing and shipping services – grew 65 percent year over year.

That broader adoption is a boon to Amazon’s expanding Prime platform, which trades free shipping and other perks for $79 per year. Amazon Marketplace Vice President Peter Faricy said in a statement that businesses that adopt Amazon logistics become eligible for Prime, which drives their sales and helps Amazon users.

Amazon added “millions” of Prime subscribers in its latest quarter, though the company doesn’t disclose how lucrative the platform is, or specific figures. Earlier this week, company CEO Jeff Bezos said Prime has at least 20 million members, reports Business Insider.

Amazon’s fulfillment business grew rapidly, too, shipping more units worldwide in late 2013 than all such units in the whole of 2009 and 2010 combined, according to company statistics. Cyber Monday was especially lucrative for Amazon this year, with units ordered growing by half. The e-commerce industry broadly broke new records in 2013 for Cyber Monday, just as traditional retailers suffered from the weakest holiday sales since 2009.

Items sold via Amazon in 2013 range from tiny containers of skin lotion to 14-foot-high wrought iron gates, with items shipped to buyers in more than 185 countries.

Amazon is likely to report its full fiscal year earnings on Feb. 4, though it hasn’t formally set a date yet. The company scored $61 billion in global revenue in 2012, its latest full year, but only $34 million in net income for the nine months ended Sept. 30, 2013.

Analysts polled by Thomson Reuters expect Amazon to report earnings per share of 66 cents per share in its next earnings, up from 21 cents a year ago. Many analysts are bullish on the company’s fundamentals as the world’s biggest e-tailer, with stock prices up 49 percent in the past year, though skeptics point out that the company makes little profit.

“Amazon owns one of the wider economic moats in the consumer sector and will likely remain a disruptive name within the retail, digital media, and cloud computing categories,” wrote Morningstar, Inc. (NASDAQ:MORN) analyst R.J. Hottovy on Jan. 2, in an upbeat take. “Amazon's growth potential is undeniable.”

Risks, though, include regulatory sales tax scrutiny and endless competition from giants like Wal-Mart Stores, Inc. (NYSE:WMT) alongside small businesses, and managing its continued expansion into its so-called peripheral businesses. Amazon’s future is highly uncertain, wrote Hottovy.

The company has also lately focused on its cloud computing business, Amazon Web Services, as well as striking up key media streaming deals. That includes a deal revealed Wednesday with CBS Corporation (NYSE:CBS), involving Halle Berry and Steven Spielberg, besides technology high-definition partnerships with Samsung Electronics Co., Ltd. (KRX:005930) and others announced earlier this week. That’s an effort to boost its mediocre Amazon Instant Video business, which lags behind market leader Netflix, Inc. (NASDAQ:NFLX)

According to industry data, Amazon significantly beat out competitor eBay Inc (NASDAQ:EBAY) in same-store sales growth from late November to Dec. 22, though it lagged behind the explosive growth of the fledging Google Shopping platform.

Amazon’s labor and hiring practices have also been spotlighted, after the UK’s Guardian ran a prominent undercover investigation in late November, with a reporter posing as a warehouse worker.

Amazon “may lay waste to several other retailers in years to come,” added Hottovy, cementing its reputation as a killer of certain small businesses.