Amazon UK yesterday extended its free-shipping offer to orders of £25 and above, from the previous £39. Its parent company, Amazon.com, meanwhile, announced a 37 per cent year-on-year increase in its second-quarter sales.
The Harry Potter craze helped propel the company's US revenues in the quarter, it announced. Amazon US sold 1.4 million copies of J.K. Rowling's fifth Harry Potter novel, Order of the Phoenix in June. The book has a list price of $29.99 but is sold by Amazon for $17.99, netting the company revenue of around $25 million – over 2 per cent of its sales.
To keep its Harry Potter shipping costs down, the company used special packaging that was two-thirds less expensive than the boxes in which it shipped the fourth Harry Potter novel, chief finance officer Tom Szkutak said.
Amazon recorded net sales of $1.1 billion in the quarter ending June 30, up from $806 million a year earlier. It made a net loss for the quarter of $43.3 million, down from $93.6 million in 2002.
The jump in sales was due to low pricing and free shipping (on orders in the US), measures the company had funded by cutting TV and print advertising spending, it said.
Announcing the new free shipping point for the UK, Amazon UK's managing dircetor Robin Terrell said: "We have been impressed by the customer response to our free delivery option. It is working extremely well both for our customers and for the business and we are delighted to lower the delivery threshold further to £25."
Amazon sees sales growth slowing and net sales coming in around $1.08 billion to $1.15 billion through the third quarter, up 26 to 35 per cent compared to the year-ago period. For the full year, it predicts net sales of $4.9 billion to $5.1 billion, or year-on-year growth of 25 to 30 per cent.
Looking further ahead, Szkutak predicted Amazon will show "more innovation in the next eight years than in the eight years since 1995," when the company began selling books over the Web.
In particular, he said, there will be more third-party sellers doing business through the site. That transformation has already begun. In the second quarter, 20 per cent of items sold through Amazon's Web sites in the quarter were new, used and refurbished items sold by third parties, up from 14 per cent a year ago.