Amazon sales hit $233bn in 2018 but sales growth slows down

AWS sales continue to grow at 40 per cent or more, but Amazon.com's growth rate is set to decline

Amazon.com sales reached $232.9 billion in 2018, up by 31 per cent on 2017, but the company indicated during its results presentation that headline growth is likely to slow in 2019, following a slowdown in sales growth in the fourth quarter.

Fourth quarter sales weighed in at $72.4 billion, up by 20 per cent, and the company warned that the growth will be even slower in 2019, with estimated sales of between $56 billion and $60 billion in the first quarter, a growth rate of between 10 per cent and 18 per cent.

However, the company's Amazon Web Services (AWS) cloud computing arm looks set to maintain revenue growth of 40 per cent or more during 2019.

AWS sales during 2018 were up by 47 per cent to $25.7 billion during 2018, while in the fourth quarter sales grew by 45.3 per cent to $7.43 billion.

That growth will be supported during 2019 following the opening of new data centres on the US east coast and Stockholm, Sweden, with Cape Town in South Africa and Milan, Italy coming soon.

"AWS now provides 60 Availability Zones across 20 infrastructure regions globally, with another 12 Availability Zones and four regions in Bahrain, Hong Kong, Italy, and South Africa all coming online by the first half of 2020," the company claimed in a statement.

The strength of the AWS business will lend weight to some investors' calls to spin it off as a separate entity. Such calls are nothing new, however.

AWS growth will be driven by a combination of cloud migration plans in order to reduce capital expenditure, as well as digital transformation projects. Cloud computing also gives organisations the opportunity to adopt new technologies such as machine learning without committing to large upfront purchases of software and IT hardware.

Elsewhere, though, Amazon's investments in bricks-and-mortar aren't looking so smart. Its Whole Foods supermarket chain saw revenues fall by three per cent. This was partly due to price-cutting following its acquisition, but Amazon also claimed that, adjusted for overlapping financial quarters, it grew by six per cent.

Amazon released its results as it was forced to go into reverse in India following changes to foreign direct investment rules relating to ecommerce. This has forced it to remove a wide range of products from its website in India, a market where it had hoped to enjoy robust growth.