Losses in the international business contracted marginally, by 3%, to $1.24 billion, from $1.28 billion in the first quarter of 2022. Amazon CEO Andy Jassy said in the earnings call that the negative margins in the international business had narrowed.
“The negative margin has come down. The top line is helping there but it’s also a function of some of the reductions that we’re making across some of our investments. Most of those are in North America, but you’ll see the kind of improvement in operational efficiency and … some of the global programmes are going to be reducing cost internationally,” he said.
India not mentioned at all
Amazon’s major overseas markets include India, Germany, the UK, the EU and Mexico. India didn’t find any mention in the post-earnings call, unlike in previous quarters, even as the company shut down several businesses and laid off about 1,000 people in the country as part of a global cost cutting exercise.
The company shut down its edtech business, wholesale arm, and food-delivery business in the last three months of 2022. These businesses were in the early stages, but Amazon India consumer business Manish Tiwary said in an interaction with ET in December that they were merely experiments.
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Overall, globally Amazon saw a 9% jump in its net sales to $127 billion, up from $116 billion in the same quarter last year, beating market expectations. Of this, $76 billion came from its North America retail business, $28 billion from its international business, and the rest from its cloud storage business, Amazon Web Services.
In March, Jassy said the company would cut jobs from its cloud and advertising businesses, taking the total layoff count to about 27,000. For international markets, Jassy reiterated what he said last quarter, when he said that investments would bear fruit in the long run.
“We have a large emerging business. In the last five years, we’ve added more than 10 new countries. What we’re seeing is, if you look back to North America long ago, it took nine years for us to reach breakeven profitability in the United States,” he said in the latest earnings call. “We see a similar curve in a lot of countries overseas. There’s, in fact, additional challenges that we usually have to deal with, things like lack of payment methods, lack of the established infrastructure … especially for transportation and infrastructure for the internet and everything else.”
Mixed performance in India
But a report from Bernstein Research had said last September that Amazon’s performance in India has been “decidedly mixed” despite investing over $6.5 billion over nine years. It said the biggest challenge for Amazon in India has been regulatory headwinds. Amazon faces an “unfavourable regulatory environment” compared to its domestic rivals, the report said.
The company is still transitioning from its biggest sellers as India’s laws do not permit marketplaces to have a stake in any of its sellers or have control over inventory. ET reported on April 12 that Appario, a seller set up by Amazon through a joint venture with Patni Group, has started shipping inventory to new sellers on the platform.
From senior leaders to category managers, these sellers largely employ people who used to work in Cloudtail (a now-defunct JV Amazon had with Infosys cofounder Narayana Murthy) and Appario, as ET had reported on August 15 last year.
But the transition from these big sellers has not been smooth for Amazon. ET reported on July 8, 2022 that sales on Amazon fell significantly as brands found it difficult to extend credit lines to the new sellers as they lacked a transaction and credit history. The sellers have also faced operational challenges.
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