5 Key Quotes from Amazon on the E-Commerce Industry

by: David Jackson

Here are five key quotes from Amazon's conference call.The first quote, about the impact of higher fuel prices, is particularly interesting given that most other companies this earnings season highlighted the negative impact of higher fuel prices:

1. Higher fuel prices help Amazon!

[W]e suspect that higher fuel prices may be a relative advantage for us both in terms of relative to physical world stores -- because of the expense of driving to a store, even just driving 10 miles these days is a few dollars worth of gasoline and consumers we suspect are beginning to take that into account and think about that and try to do trip consolidation and so certainly our free shipping offers and Amazon Prime become very high, a clearly of even more value to customers under that set of circumstances. And then relative to other online retailers because of our scale -- we have a distributed fulfillment center network that places products closer to customers that allows us to do fast transportation to customers, fast deliveries to customers but usually using ground transportation instead of air transportation and ground transportation is much more fuel efficient then air transportation

2. Amazon as a platform for third party sellers

[T]hird party units, the percentage of total units was 29% which is flat with last year. Keep in mind that our unit growth did accelerate in total so our unit growth was 32% ...another data point is our third party units did grow faster then our retail units this quarter... active seller accounts... are up 18% year-over-year -- that compares to a year ago where they’re up 11%. We’ve had several quarters where we’ve seen accelerated growth of active seller accounts... Ultimately the customer will decide what units they buy and we’re trying to make the experience better for customers and for sellers.

3. International growth and the impact of the weaker dollar

In the international segment revenue grew 47% to $1.89 billion. Revenue growth was 34% adjusted for the $179 million year-over-year favorable impact from foreign exchange rates during the quarter. Media revenue grew 38% to $1.26 billion, or 25% excluding FX, and EGM [Electronics & Other General Merchandise] revenue grew 68% to $611 million, or 52% excluding FX. EGM now represents 32% of international revenues, up from 28%.

4. Kindle - Amazon's e-book reader

Mark Mahaney – Citigroup: Anything you can share with us and then any comment at all on the Kindle and what kind of—how many units you’ve sold or any kind of demand metrics there? Jeffrey Bezos – Amazon: What I can tell you on Kindle is that we’re not releasing the number of units of Kindle that we’ve sold, the number of devices, what we have said is that we are, if you look at the universe of titles where we saw the Kindle version, so those 140,000 different titles, the percentage of all-in units that are in Kindle unit form versus their physical book equivalent for that same universe is low double-digits at this point, which we’re very excited about.

5. Guidance

For Q3 we expect net sales of between $4.2 billion and $4.425 billion, a growth of between 29% and 36%. This guidance anticipates approximately 450 basis points of positive impact from foreign exchange. GAAP operating income to be between $115 million and $160 million, or between 6% decline and 31% growth. This includes approximately $80 million for stock-based compensation and amortization of intangible assets.

The quotes are taken from the Amazon transcript which was published on Seeking Alpha a few hours after the call ended. If you think I missed something more important than these quotes, feel free to copy and paste your quote from the full transcript and leave as a comment below.