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Early Diwali may hit Amazon’s Q4 growth, Retail News, ET Retail


Early Diwali may hit Amazon’s Q4 growth Bengaluru: Amazon’s international sales growth rate might be impacted in the final quarter of this financial year as parts of Diwali sale happened in the third quarter this year. The festive sale had taken place in the fourth quarter last year, said Amazon CFO Brian Olsavsky. He was speaking to analysts after the announcement of its September quarter earnings.

The e-tailing major’s losses from international business, which counts India as a critical market, remained flat at $386 million (Rs 2,735 crore) for the quarter ended September 2019 compared to $385 million (Rs 2,728 crore) a year ago. On a sequential basis, the Seattle-based company had clocked losses of $601 million (Rs 4,258 crore) in this business for the quarter ended June this year.

“The Diwali holiday was all in the fourth quarter last year and a bit of it was in third quarter this year,” Olsavsky said, citing it as one of the reasons for his outlook on the final quarter. He mentioned Japan raising consumption tax was another reason for the outlook.

“So, if you wrap those together, we expect it’s going to be more of an issue with our international growth rate,” he added. Olsavsky added he was looking forward to the fourth quarter when holiday sales will start in the US. It has estimated a cost of $1.5 billion for faster shipping, largely for its one-day delivery, to consumers during this season in the US.

Amazon, which is finishing its last leg of the festive sale in India, has been under the scrutiny of the government along with rival Walmart. Commerce minister Piyush Goyal recently said his ministry was probing the role of Walmart (via Flipkart) and Amazon in predatory pricing affecting small traders in the offline market. These companies have been sent a detailed questionnaire on the issue too.

Both Amazon and Walmart maintain they are compliant with local laws.

Globally, Amazon saw sales of $70 billion during the quarter under review, a jump of 24%. Its profits stood at $2.1 billion for the third quarter compared to $2.9 billion in the same period last year. This is the first time Amazon has recorded a lower profit on a year-on-year basis since the second quarter of 2017.

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