Amazon chief: We'll make $1bn a quarter
Published: 08 Oct 2002 08:37 BST
Amazon chief exective Jeff Bezos believes the company he founded eight years ago is on the verge of becoming a profit-making business with $4bn in annual revenues - and says that selling second-hand goods of all kinds will play a key role in that ambition.
Bezos was in London on Monday to promote the UK launch of Amazon's Used Stores offering, part of its online Marketplace service which allows customers to buy and sell new, used and collectable items.
From Monday, Amazon.co.uk will feature a Used Store across each of its book, music, DVD, video, electronic and PC and video game categories, which - Bezos hopes - will be a key driver of the company's growth. Marketplace has been up and running in the US for two years and in the UK since March, and third party unit sales now amount to over 30 percent of total units shipped by the company.
Bezos said: "The UK launch of Marketplace has gone even better than the US - and in the US it was our fastest growing business. We've seen double digit growth month on month each and every month since the launch here."
Amazon.com famously managed to make a profit in the fourth quarter of its last financial year on revenues of $1bn - a key figure in Bezos' calculations.
While refusing to be drawn on timescales for year-round profitability, the affable - if evasive - Bezos said: "Cash flow generation is the right measure of our business. We have a lot of fixed costs and we need about $1bn per quarter in revenue. You saw us be profitable in Q4 last year because we did have $1bn in revenue. As the business continues to grow, we will make $1bn every quarter."
Christmas is traditionally a key time for e-tailers and often helps boost their sales, as it did for Amazon last year - but again, when asked whether he is expecting a Yuletide boost, Bezos was reluctant to make any firm predictions.
"I predict that people will still buy presents this Christmas," he laughed.
He is determined to continue to make Amazon's operations more efficient to help achieve those elusive profits. He wants fulfilment costs as a percentage of sales to be in the high single figures - at the moment, they're just over 10 percent. He wants operating margins as a percentage of sales to be in the low double digits "over time" - but again, wouldn't give a deadline for that target.
The company had 27 million active customers in the last 12 months, with Amazon.co.uk attracting 2.2 million unique users in Q3 2002, up 29 percent year-on-year, according to NetValue.
And with growth figures like that, Bezos can be excused for thinking there are few barriers to future success. Even the sluggish rollout of broadband in the UK is not an issue.
"For us the things that will drive growth is to expand our product offering, and continue to drive down costs so that we can reduce the price of our products even further," he said. "Broadband is not a barrier. It's an opportunity to grow in the future. We are growing very rapidly right now, so I don't see that there are any barriers."
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