Seattle's most popular Fortune 500 company, Amazon.com, secured its rank as the world's largest online retailer when the company announced that its fourth quarter sales went up 36% to $12.95 billion. These figures, according to Mark Brohan at Internet Retailer, indicate that Amazon "accounted for more than 10% of online retail sales in North America in 2010."
We keep close tabs on Amazon at dealnews — from tracking deals to noting the company's Best Customer Service Award to its experimental AmazonTote delivery service — but we wanted to know more about the cause of this year's sales boost. What were people buying that gave this 16-year-old company such a large market share suddenly?
Although Amazon declined to comment, CEO Jeff Bezos made the following statement in a recent press release about this landmark in the company's sixteen-year history: "We had our first $10 billion quarter, and after selling millions of third-generation Kindles with the new Pearl e-ink display during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com … That was a big reason Amazon’s top line boomed in the fourth quarter"
So, in a word: books. Specifically, Kindle books — and Kindle-related products — are what's putting a lot of distance between Amazon and the rest of its competitors in the online retail arena. Although Amazon does not disclose Kindle sales, they must account for much of Amazon's fourth quarter profits, since the company sold "three times as many Kindle books as hardcover books," according to Amazon's press release. In fact, most of the bullet points from the company's 2010 highlights reflect a rise in Kindle sales.
Here are a few of those highlights reported by Amazon:
- Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the company has sold 115 Kindle books. This is across Amazon.com's entire U.S. book business and includes sales of books where there is no Kindle edition. Free Kindle books are excluded, but if included, would make the numbers even higher.
- Sales of the third-generation Kindle eclipsed "Harry Potter and the Deathly Hallows" as the bestselling product in Amazon's history.
- The U.S. Kindle Store now has more than 810,000. Over 670,000 of these books are $9.99 or less.
- Amazon added to its list of apps with the Kindle app for Windows Phone 7.
While the Kindle boom may predict a grim future for Luddites who prefer paper over a computer screen, Kindle sales could mean a promising first quarter for Amazon. The company expects net sales to "grow between 28% and 39% compared with first quarter 2010." Admittedly, these predictions are subject to change, but for the largest and fastest-growing company in e-commerce, anything is possible.
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