uploads///Amazons revenue growth

Why Amazon’s 2Q16 Top Line Remained Strong

Amit Singh - Author
By

Dec. 4 2020, Updated 10:52 a.m. ET

Amazon Prime boosted top-line growth

Amazon.com’s (AMZN) top line increased by 31.1% YoY (year-over-year) to $30.4 billion in 2Q16 on account of healthy e-commerce sales driven by Amazon Prime membership growth. Moreover, strong revenue from the company’s cloud computing business meaningfully contributed to its overall top line.

Prime gives Amazon a competitive edge over retailers such as Wal-Mart Stores (WMT), eBay (EBAY), Target (TGT), and Macy’s (M) by keeping its memberships intact through exclusive deals, videos, and fast and free shipping. For 3Q16, the company has given guidance for revenue in the range of $31.0 billion–$33.5 billion, which translates to growth in the range of 22%–32% YoY.

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How Amazon drives Prime membership growth

Amazon Prime costs $99 per year and offers free two-day, same-day, and one-hour shipping along with video streaming services, music, and the ability to borrow books from the Kindle lending library. These offerings differentiate Amazon from competitors and are the primary reasons why Amazon has seen robust growth in its Prime memberships.

Although Amazon has never been vocal about the number of members using its Prime services, it has stated that worldwide Prime subscriptions rose by 51% YoY in 2015, while Prime subscription growth was 47% in the United States (IVV). Meanwhile, the recently concluded second annual Prime Day is further expected to give a boost to its Prime membership. Amazon reported that its second annual Prime Day was a big success, having witnessed a 60% growth on an order-product sales basis as compared to Prime Day 2015.

Now let’s discuss the role of the cloud in Amazon’s business.

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