Tuesday, January 5, 1999 Published at 16:06 GMT
Business: The Company File
Christmas sales boom for Amazon.com
Online selling...as yet a sales-rich, profit-poor business
Leading Internet bookseller Amazon.com has reported a 250% increase in fourth-quarter sales for 1998.
The result adds to the growing body of evidence that electronic commerce over the Internet is increasing at an exponential rate. But online sellers are still struggling to turn this success into profits.
Jeff Bezos, the company's founder, chief executive and 48% shareholder, said in a statement: "We had more business than our most optimistic projections. If the result can be repeated...Amazon will top the $1bn annual sales level in 1999.
However, announcing the latest figures, Amazon cautioned that the jump in sales would not translate into reduced losses.
Despite customers flocking to their online store in the run up to Christmas, aggressive pricing and big sales of low-margin music and video products cut profit margins.
The company that leads the world in online book selling after investing heavily in what it sees as the future of book retailing, still runs at a loss after launching in 1994. The costs of mergers and acquisitions saw the company lose $45m in the third quarter of 1998 despite sharply rising sales.
However, Amazon said more than 1m new customers shopped online with the company between mid-November and the end of December, with over 7.5m items sold - more than it shipped during all of 1997.
Amazon shares had risen to $124.87 by 1530 GMT. Its share price has climbed from $10 a year despite more shares being issued in the meantime.
Online service provider America Online said on Monday that its subscribers spent $1.2bn on its network, the online equivalent of a shopping mall, during the holiday season.
Netscape Communications said its internet portal site Netscape Netcenter has surpassed 10m members.
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