Why Amazon’s International Segment Margins Have Not Improved
Must-Know Factors Driving Amazon's Stock
Amazon’s operating margins from International segment remained in the negative
In the previous part of the series, we discussed how Amazon (AMZN) managed to grow its operating margins from the North America region. However, the situation is different in international markets for Amazon. As the chart below shows, the operating margins for Amazon’s International segment have remained in the negative over the last few quarters.
According to the company, there are two reasons why its performance in the international markets is not as good as its performance in North America. First, currency issues from the strong US dollar shaved 7% off of Amazon’s revenue growth in the last quarter. Second, the company is now looking to double down on its investment in the Indian e-commerce market because of the potential that this market possesses.
Amazon will more than double its investment in India
Last year, Amazon announced that it will invest $2 billion in the Indian e-commerce market. Amazon could now increase its investment there to $5 billion over the next few years, according to a report from The Economic Times citing two people familiar with the matter. This would make India (EPI) Amazon’s largest market outside the United States.
Alibaba (BABA), the largest e-commerce player in China (FXI), has also increased its investment in India. Alibaba has reportedly raised its stake in the Indian e-commerce player Paytm.
Currently, the Indian e-commerce market is led by local players Flipkart and Snapdeal, with eBay (EBAY) also trying to gain market share. With the fast growth potential of the Indian e-commerce market, Amazon and Alibaba are both trying to provide stiff competition for these players.
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