Amazon Australia still losing money despite hitting $1bn sales in 2020
Amazon Australia has continued a run of losses despite more than doubling its local sales to more than $1bn.
Amazon Australia has continued a run of losses despite more than doubling its local sales to more than $1bn, according to the online retailer’s latest results.
Despite the huge growth, Amazon Australia’s results revealed the company still closed the year with a $3.8m loss, according to its accounts lodge with the corporate regulator.
The accounts also revealed that Amazon’s Seattle-headquartered parent injected $210m into the local company during the year in the form of new shares to help fund its expansion.
Revenue from Amazon’s online stores led the charge in its 2020 results, delivering $511m. Services, which includes revenue from third parties selling on the Amazon platform and warehouse, more than doubled to $126m in net sales. Total sales came in at $1.12bn, a huge jump from $562.1m a year earlier.
Amazon’s recent consumer trends report shows its customers piled into toilet paper, face masks, Lego, and Nintendo Switch gaming consoles in 2020. Huggies nappies led the subscription service, followed by baby wipes.
But inventories across the group have barely moved in the face of the burgeoning business and the expansion of Amazon Australia’s footprint.
The company, which employs, nearly 1000 people, also appears to be riding a wave of unredeemed gift cards, with almost $17m sitting on the company’s balance sheet.
Amazon’s subscription services, such as Amazon Prime, were huge winners in 2020 almost tripling sales to $90m, which was up from $35.4m.
Prepayments of Amazon Prime and third-party seller services buoyed revenue by $6.95m.
Provisioning for income taxes of $11m saw the retailer’s slim $7.2m profit drop into the red.
Almost $8.3m in deferred taxes helped pull the tax bill down from $19.41m.
The loss is the second in a row for the retailer, which arrived on Australian shores in 2017, following its $2.5m loss in 2019.
The American online behemoth launched its bid for Australian shoppers’ wallets by opening the doors of its Melbourne hub in December 2017, before swiftly moving on to Perth and Sydney.
Amazon has been spending big in Australia in recent years, taking up leaseholds on several sites around the country in a bid to gain a footprint in major metro areas. Work is under way on building its second distribution centre in Sydney, expected to cost almost $500m, with plans to open it later this year.
The business opened its fourth Australian distribution centre in the Brisbane suburb of Lytton in September last year.
The rapid expansion by Amazon Australia has seen the company throw money at purchases of property and equipment, dropping $71.9m in 2020.
The company also recently locked in behind a $750m new tower project in Melbourne’s CBD, with plans to move from its current base on Exhibition Street in the city centre.
The business is also looking set to move into a new headquarters on Sydney’s Market Street when construction wraps up.
Lease costs across the group almost doubled as it grabbed more land, rising to $48.8m in 2020 from $24.72m last year.
Long term lease liabilities weighing on the American giant’s Australian outpost to the tune of $39.83m. This was well up on the only $19.37m just one year ago.
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