The book business launched Amazon to success, and now it’s hurting the online retailer’s growth.
Amazon announced its worst quarterly loss in 14 years Thursday, losing $437 million in three months. One of its worst-performing segments? Amazon’s old core business: North American book, movie and music sales. The segment’s sales increased a mere 4.8% from 2013, the slowest growth for the category in more than five years. That compares with a 17.8% growth in that segment a year ago.
Amazon chalked up the slow media segment growth to fewer students buying textbooks, but that doesn't seem to be the whole story. In fact, the company’s woes may in part be related to its damaging publicity spat with the publisher Hachette.
Frizell thinks that, in a quarter where Amazon's overall revenues increased by 20%, a growth rate of a mere 4.8% is a bad thing.
In other words, consumers are buying lots more from Amazon than they did last year, and they're even buying more media than last year, but because the growth rate in that one segment has slowed Times thinks consumers are unhappy with Amazon.
If that is a valid argument then I have to wonder what grudge consumers are holding against Barnes & Noble. That retailer's revenues peaked years ago and its struggled since then to build itself up.
Or perhaps the Times piece (which I found because DBW gave it the lead this morning) is simply nonsense.
What do you think?
image by nist6dh